Here is What Hedge Funds Think About Western Refining Logistics LP (WNRL)

The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Western Refining Logistics LP (NYSE:WNRL) from the perspective of those successful funds.

Is Western Refining Logistics LP (NYSE:WNRL) a buy right now? Investors who are in the know are definitely getting more bullish. The number of long hedge fund positions that are disclosed in regulatory 13F filings strengthened by 2 in recent months. There were 7 hedge funds in our database with WNRL holdings at the end of the third quarter. 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 iRobot Corporation (NASDAQ:IRBT), COMSCORE, Inc. (NASDAQ:SCOR), and ESCO Technologies Inc. (NYSE:ESE) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, we’re going to view the recent action regarding Western Refining Logistics LP (NYSE:WNRL).

How are hedge funds trading Western Refining Logistics LP (NYSE:WNRL)?

Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a boost of 40% from the second quarter of 2016. By comparison, 0 hedge funds held shares or bullish call options in WNRL heading into this year. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Magnetar Capital, led by Alec Litowitz and Ross Laser, holds the largest position in Western Refining Logistics LP (NYSE:WNRL). According to regulatory filings, the fund has a $46.3 million position in the stock, comprising 0.7% of its 13F portfolio. On Magnetar Capital’s heels is Stuart J. Zimmer of Zimmer Partners, with a $39.4 million position; 1.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish consist of Vishal Bhutani and Joshua Bederman’s Pyrrho Capital Management, Matthew Hulsizer’s PEAK6 Capital Management and Renaissance Technologies, one of the largest hedge funds in the world. We should note that Zimmer Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Pyrrho Capital Management, led by Vishal Bhutani and Joshua Bederman, initiated the most outsized position in Western Refining Logistics LP (NYSE:WNRL). According to its latest 13F filing, the fund had $1.8 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Western Refining Logistics LP (NYSE:WNRL) but similarly valued. These stocks are iRobot Corporation (NASDAQ:IRBT), COMSCORE, Inc. (NASDAQ:SCOR), ESCO Technologies Inc. (NYSE:ESE), and Kaman Corporation (NYSE:KAMN). This group of stocks’ market values match WNRL’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $90 million in WNRL’s case. COMSCORE, Inc. (NASDAQ:SCOR) is the most popular stock in this table. On the other hand ESCO Technologies Inc. (NYSE:ESE) is the least popular one with only 5 bullish hedge fund positions. Western Refining Logistics LP (NYSE:WNRL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SCOR might be a better candidate to consider taking a long position in.

Disclosure: none.