We can judge whether Magellan Midstream Partners, L.P. (NYSE:MMP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Magellan Midstream Partners, L.P. (NYSE:MMP) was in 10 hedge funds’ portfolios at the end of the first quarter of 2019. MMP investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 12 hedge funds in our database with MMP holdings at the end of the previous quarter. Our calculations also showed that mmp isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the fresh hedge fund action surrounding Magellan Midstream Partners, L.P. (NYSE:MMP).
How are hedge funds trading Magellan Midstream Partners, L.P. (NYSE:MMP)?
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MMP over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Magellan Midstream Partners, L.P. (NYSE:MMP) was held by Renaissance Technologies, which reported holding $29.2 million worth of stock at the end of March. It was followed by Osterweis Capital Management with a $17.3 million position. Other investors bullish on the company included Citadel Investment Group, Soros Fund Management, and BP Capital.
Seeing as Magellan Midstream Partners, L.P. (NYSE:MMP) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers who were dropping their positions entirely heading into Q3. Interestingly, Daniel Arbess’s Perella Weinberg Partners said goodbye to the largest position of all the hedgies watched by Insider Monkey, comprising an estimated $13.9 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its stock, about $0.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to Magellan Midstream Partners, L.P. (NYSE:MMP). We will take a look at Devon Energy Corp (NYSE:DVN), Copart, Inc. (NASDAQ:CPRT), Markel Corporation (NYSE:MKL), and CNH Industrial NV (NYSE:CNHI). All of these stocks’ market caps match MMP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DVN | 40 | 1406115 | -2 |
| CPRT | 24 | 252865 | -4 |
| MKL | 23 | 1039316 | -1 |
| CNHI | 23 | 406434 | 7 |
| Average | 27.5 | 776183 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $776 million. That figure was $69 million in MMP’s case. Devon Energy Corp (NYSE:DVN) is the most popular stock in this table. On the other hand Markel Corporation (NYSE:MKL) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Magellan Midstream Partners, L.P. (NYSE:MMP) is even less popular than MKL. Hedge funds dodged a bullet by taking a bearish stance towards MMP. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MMP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MMP investors were disappointed as the stock returned 3.6% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
