Before we spend many hours researching a company, we’d like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Magellan Midstream Partners, L.P. (NYSE:MMP).
Hedge fund interest in Magellan Midstream Partners, L.P. (NYSE:MMP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare MMP to other stocks including Ameren Corporation (NYSE:AEE), Celanese Corporation (NYSE:CE), and Mercadolibre Inc (NASDAQ:MELI) to get a better sense of its popularity.
In the eyes of most stock holders, hedge funds are seen as slow, old financial tools of the past. While there are over 8,000 funds trading at present, We look at the aristocrats of this group, around 700 funds. Most estimates calculate that this group of people handle bulk of the smart money’s total capital, and by monitoring their first-class investments, Insider Monkey has determined various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We’re going to view the new hedge fund action surrounding Magellan Midstream Partners, L.P. (NYSE:MMP).
How have hedgies been trading Magellan Midstream Partners, L.P. (NYSE:MMP)?
Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in MMP heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Osterweis Capital Management, managed by John Osterweis, holds the biggest position in Magellan Midstream Partners, L.P. (NYSE:MMP). Osterweis Capital Management has a $21 million position in the stock, comprising 1.3% of its 13F portfolio. On Osterweis Capital Management’s heels is Renaissance Technologies, led by Jim Simons, holding a $15.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Daniel Arbess’s Perella Weinberg Partners, and Ken Griffin’s Citadel Investment Group.
Seeing as Magellan Midstream Partners, L.P. (NYSE:MMP) has experienced declining sentiment from the smart money, we can see that there were a few hedgies who sold off their entire stakes heading into Q3. It’s worth mentioning that Bernard Selz’s Selz Capital sold off the largest position of the 700 funds followed by Insider Monkey, comprising about $3.6 million in stock, and George Hall’s Clinton Group was right behind this move, as the fund sold off about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Magellan Midstream Partners, L.P. (NYSE:MMP) but similarly valued. We will take a look at Ameren Corporation (NYSE:AEE), Celanese Corporation (NYSE:CE), Mercadolibre Inc (NASDAQ:MELI), and Lennar Corporation (NYSE:LEN). This group of stocks’ market valuations match MMP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEE | 21 | 684395 | 5 |
| CE | 32 | 1332134 | -1 |
| MELI | 27 | 1977651 | -2 |
| LEN | 66 | 2818386 | 3 |
| Average | 36.5 | 1703142 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.70 billion. That figure was $74 million in MMP’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Ameren Corporation (NYSE:AEE) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Magellan Midstream Partners, L.P. (NYSE:MMP) is even less popular than AEE. 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.
Disclosure: None. This article was originally published at Insider Monkey.
