Here is What Hedge Funds Think About Equitrans Midstream Corporation (ETRN)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Equitrans Midstream Corporation (NYSE:ETRN).

Equitrans Midstream Corporation (NYSE:ETRN) shareholders have witnessed a decrease in hedge fund interest in recent months. Equitrans Midstream Corporation (NYSE:ETRN) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 29. There were 27 hedge funds in our database with ETRN holdings at the end of June. Our calculations also showed that ETRN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to view the key hedge fund action surrounding Equitrans Midstream Corporation (NYSE:ETRN).

Michael Lowenstein of Kensico Capital

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

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in ETRN a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, Zimmer Partners was the largest shareholder of Equitrans Midstream Corporation (NYSE:ETRN), with a stake worth $39.3 million reported as of the end of September. Trailing Zimmer Partners was GoldenTree Asset Management, which amassed a stake valued at $36.6 million. Kensico Capital, Redwood Capital Management, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Valueworks LLC allocated the biggest weight to Equitrans Midstream Corporation (NYSE:ETRN), around 2.54% of its 13F portfolio. Redwood Capital Management is also relatively very bullish on the stock, designating 2.44 percent of its 13F equity portfolio to ETRN.

Due to the fact that Equitrans Midstream Corporation (NYSE:ETRN) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there were a few funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital sold off the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $0.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dropped its stock, about $0.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Equitrans Midstream Corporation (NYSE:ETRN). We will take a look at SeaWorld Entertainment Inc (NYSE:SEAS), Envestnet Inc (NYSE:ENV), Option Care Health, Inc. (NASDAQ:OPCH), Tegna Inc (NYSE:TGNA), Coursera, Inc. (NYSE:COUR), American Eagle Outfitters Inc. (NYSE:AEO), and Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX). This group of stocks’ market caps are similar to ETRN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $715 million. That figure was $258 million in ETRN’s case. SeaWorld Entertainment Inc (NYSE:SEAS) is the most popular stock in this table. On the other hand Envestnet Inc (NYSE:ENV) is the least popular one with only 12 bullish hedge fund positions. Equitrans Midstream Corporation (NYSE:ETRN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ETRN is 53.9. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately ETRN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ETRN investors were disappointed as the stock returned -1.2% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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