Here is What Hedge Funds Think About Altus Midstream Company (ALTM)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Altus Midstream Company (NASDAQ:ALTM)? The smart money sentiment can provide an answer to this question.

Altus Midstream Company (NASDAQ:ALTM) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that ALTM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Guild Holdings Company (NYSE:GHLD), Orla Mining Ltd. (NYSE:ORLA), and Citi Trends, Inc. (NASDAQ:CTRN) to gather more data points.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $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. Keeping this in mind let’s go over the recent hedge fund action regarding Altus Midstream Company (NASDAQ:ALTM).

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

Heading into the second quarter of 2021, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ALTM over the last 23 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the biggest position in Altus Midstream Company (NASDAQ:ALTM), worth close to $1.1 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Michael Gelband of ExodusPoint Capital, with a $0.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that are bullish consist of Steve Pattyn’s Yaupon Capital, Simon Sadler’s Segantii Capital and . In terms of the portfolio weights assigned to each position Yaupon Capital allocated the biggest weight to Altus Midstream Company (NASDAQ:ALTM), around 0.25% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to ALTM.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Segantii Capital).

Let’s go over hedge fund activity in other stocks similar to Altus Midstream Company (NASDAQ:ALTM). These stocks are Guild Holdings Company (NYSE:GHLD), Orla Mining Ltd. (NYSE:ORLA), Citi Trends, Inc. (NASDAQ:CTRN), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Orthofix Medical Inc (NASDAQ:OFIX), Westlake Chemical Partners LP (NYSE:WLKP), and Veru Inc. (NASDAQ:VERU). This group of stocks’ market caps match ALTM’s market cap.

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As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $2 million in ALTM’s case. Citi Trends, Inc. (NASDAQ:CTRN) is the most popular stock in this table. On the other hand Orla Mining Ltd. (NYSE:ORLA) is the least popular one with only 2 bullish hedge fund positions. Altus Midstream Company (NASDAQ:ALTM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALTM is 16.2. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on ALTM as the stock returned 33.5% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

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

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