We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards AmeriGas Partners, L.P. (NYSE:APU) , and what that likely means for the prospects of the company and its stock.
AmeriGas Partners, L.P. (NYSE:APU) was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. APU investors should pay attention to an increase in support from the world’s most successful money managers recently. There were 5 hedge funds in our database with APU holdings at the end of the previous quarter. At the end of this article we will also compare APU to other stocks including FNFV Group (NYSE:FNFV), Great Plains Energy Incorporated (NYSE:GXP), and Lincoln Electric Holdings, Inc. (NASDAQ:LECO) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s take a look at the key action surrounding AmeriGas Partners, L.P. (NYSE:APU).
How are hedge funds trading AmeriGas Partners, L.P. (NYSE:APU)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the second quarter of 2016. On the other hand, there were a total of 9 hedge funds with a bullish position in APU at the beginning of this year. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, McKinley Capital Management, led by Robert B. Gillam, holds the largest position in AmeriGas Partners, L.P. (NYSE:APU). McKinley Capital Management has a $1.8 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, holding a $1.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that are bullish encompass Matthew Hulsizer’s PEAK6 Capital Management, Christopher C. Grisanti’s Grisanti Brown & Partners and Joshua Packwood and Schuster Tanger’s Radix Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Renaissance Technologies, led by Jim Simons, assembled the most valuable position in AmeriGas Partners, L.P. (NYSE:APU). Renaissance Technologies had $1.4 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new APU investors: Christopher C. Grisanti’s Grisanti Brown & Partners, Ken Griffin’s Citadel Investment Group, and George Hall’s Clinton Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AmeriGas Partners, L.P. (NYSE:APU) but similarly valued. We will take a look at FNFV Group (NYSE:FNFV), Great Plains Energy Incorporated (NYSE:GXP), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), and BlackBerry Ltd (NASDAQ:BBRY). This group of stocks’ market values match APU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FNFV | 19 | 205511 | -1 |
| GXP | 33 | 1194270 | 8 |
| LECO | 17 | 232734 | -1 |
| BBRY | 23 | 794094 | 3 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $607 million. That figure was $6 million in APU’s case. Great Plains Energy Incorporated (NYSE:GXP) is the most popular stock in this table. On the other hand Lincoln Electric Holdings, Inc. (NASDAQ:LECO) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks AmeriGas Partners, L.P. (NYSE:APU) is even less popular than LECO. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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