Here is What Hedge Funds Think About Memorial Production Partners LP (MEMP)

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is Memorial Production Partners LP (NASDAQ:MEMP) a buy right now? Prominent investors are selling. The number of long hedge fund bets decreased by 2 in recent months. At the end of this article, we will also compare Memorial Production Partners LP (NASDAQ:MEMP) to other stocks, including Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), and Healthways, Inc. (NASDAQ:HWAY) to get a better sense of its popularity.

In the 21st century investor’s toolkit, there are tons of indicators stock traders put to use to value stocks. A couple of the most useful indicators are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the broader indices by a superb margin (see the details here).

Keeping this in mind, let’s take a peek at the fresh action surrounding Memorial Production Partners LP (NASDAQ:MEMP).

How are hedge funds trading Memorial Production Partners LP (NASDAQ:MEMP)?

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 33% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Charles Goldblum’s Hurley Capital has the largest position in Memorial Production Partners LP (NASDAQ:MEMP), worth close to $7.5 million, accounting for 8.3% of its total 13F portfolio. Coming in second is PEAK6 Capital Management, managed by Matthew Hulsizer, which holds a $1.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Ken Griffin’s Citadel Investment Group.

Because Memorial Production Partners LP (NASDAQ:MEMP) has a witnessed falling interest from hedge fund managers, logic holds that there lies a certain “tier” of funds who were dropping their full holdings in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest investment of the 700 funds tracked by Insider Monkey, comprising about $1.4 million in stock, and Robert B. Gillam’s McKinley Capital Management was right behind this move, as the fund cut about $0.5 million worth of shares. These moves are important to note, as total hedge fund interest fell by 2 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Memorial Production Partners LP (NASDAQ:MEMP) but similarly valued. These stocks are Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), Healthways, Inc. (NASDAQ:HWAY), and Accuray Incorporated (NASDAQ:ARAY). All of these stocks’ market caps are similar to Memorial Production Partners LP (NASDAQ:MEMP)’s market cap.

As you can see, these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $10 million in Memorial Production Partners LP (NASDAQ:MEMP)’s case. Healthways, Inc. (NASDAQ:HWAY) is the most popular stock in this table. On the other hand, Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks, Memorial Production Partners LP (NASDAQ:MEMP) is even less popular than Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX). 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.