Is Boardwalk Pipeline Partners, LP (BWP) A Good Stock To Buy?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Boardwalk Pipeline Partners, LP (NYSE:BWP).

Boardwalk Pipeline Partners, LP (NYSE:BWP) has experienced an increase in hedge fund interest of late. There were 18 funds in our database with BWP holdings at the end of the third quarter. However, 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 ICON plc – Ordinary Shares (NASDAQ:ICLR), Euronet Worldwide, Inc. (NASDAQ:EEFT), and Patheon NV (NYSE:PTHN) 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.

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With all of this in mind, let’s take a glance at the new action surrounding Boardwalk Pipeline Partners, LP (NYSE:BWP).

How are hedge funds trading Boardwalk Pipeline Partners, LP (NYSE:BWP)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by two funds from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BWP over the last five quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Alec Litowitz and Ross Laser’s Magnetar Capital holds the most valuable position in Boardwalk Pipeline Partners, LP (NYSE:BWP). Magnetar Capital has a $81.5 million position in the stock, comprising 1.3% of its 13F portfolio. Coming in second is Zimmer Partners, led by Stuart J. Zimmer, holding a $20.3 million position; 0.5% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain James Dondero’s Highland Capital Management, Israel Englander’s Millennium Management, one of the largest hedge funds in the world, and Chuck Royce’s Royce & Associates. 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.

Now, some big names were breaking ground themselves. Panning Capital Management, led by Kieran Goodwin, initiated the most outsized position in Boardwalk Pipeline Partners, LP (NYSE:BWP). Panning Capital Management had $1.4 million invested in the company at the end of the quarter. Jim Simons’ Renaissance Technologies also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new BWP investors: Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Griffin’s Citadel Investment Group.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Boardwalk Pipeline Partners, LP (NYSE:BWP) but similarly valued. We will take a look at ICON plc – Ordinary Shares (NASDAQ:ICLR), Euronet Worldwide, Inc. (NASDAQ:EEFT), Patheon NV (NYSE:PTHN), and AmeriGas Partners, L.P. (NYSE:APU). All of these stocks’ market caps resemble BWP’s market cap.

As you can see these stocks had an average of 18 funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $141 million in BWP’s case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand AmeriGas Partners, L.P. (NYSE:APU) is the least popular one with only eight bullish hedge fund positions. Boardwalk Pipeline Partners, LP (NYSE:BWP) is not the most popular stock in this group but hedge fund interest is in-line with the average value. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EEFT might be a better candidate to consider taking a long position in.

Disclosure: none