Hedge Funds Are Buying Capital Product Partners L.P. (CPLP)

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Capital Product Partners L.P. (NASDAQ:CPLP) makes for a good investment right now.

Capital Product Partners L.P. (NASDAQ:CPLP) shareholders have witnessed an increase in hedge fund interest recently. Capital Product Partners L.P. (NASDAQ:CPLP) was in 5 hedge funds’ portfolios at the end of March. The all time high for this statistic is 7. There were 2 hedge funds in our database with CPLP holdings at the end of December. Our calculations also showed that CPLP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a gander at the key hedge fund action encompassing Capital Product Partners L.P. (NASDAQ:CPLP).

Do Hedge Funds Think CPLP Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 150% from the fourth quarter of 2020. By comparison, 4 hedge funds held shares or bullish call options in CPLP a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Capital Product Partners L.P. (NASDAQ:CPLP) was held by Invenomic Capital Management, which reported holding $1 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $0.9 million position. Other investors bullish on the company included Citadel Investment Group, Citadel Investment Group, and Millennium Management. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Capital Product Partners L.P. (NASDAQ:CPLP), around 0.23% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.0011 percent of its 13F equity portfolio to CPLP.

As aggregate interest increased, key money managers were breaking ground themselves. Invenomic Capital Management, managed by Ali Motamed, initiated the largest position in Capital Product Partners L.P. (NASDAQ:CPLP). Invenomic Capital Management had $1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.3 million position during the quarter. The only other fund with a brand new CPLP position is Israel Englander’s Millennium Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Capital Product Partners L.P. (NASDAQ:CPLP) but similarly valued. These stocks are Weyco Group, Inc. (NASDAQ:WEYS), Hycroft Mining Holding Corporation (NASDAQ:HYMC), Wrap Technologies, Inc. (NASDAQ:WRAP), International Tower Hill Mines Ltd (NYSE:THM), Savara, Inc. (NASDAQ:SVRA), Equillium, Inc. (NASDAQ:EQ), and Identiv, Inc. (NASDAQ:INVE). All of these stocks’ market caps are closest to CPLP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $3 million in CPLP’s case. Hycroft Mining Holding Corporation (NASDAQ:HYMC) is the most popular stock in this table. On the other hand Weyco Group, Inc. (NASDAQ:WEYS) is the least popular one with only 2 bullish hedge fund positions. Capital Product Partners L.P. (NASDAQ:CPLP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPLP is 38.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on CPLP as the stock returned 13.8% since the end of the first quarter (through 6/18) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.

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