In this article we will check out the progression of hedge fund sentiment towards Corenergy Infrastructure Trust Inc (NYSE:CORR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is CORR a good stock to buy? Corenergy Infrastructure Trust Inc (NYSE:CORR) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 11. CORR investors should be aware of a decrease in enthusiasm from smart money of late. There were 10 hedge funds in our database with CORR holdings at the end of December. Our calculations also showed that CORR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to review the recent hedge fund action surrounding Corenergy Infrastructure Trust Inc (NYSE:CORR).
Do Hedge Funds Think CORR Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CORR over the last 23 quarters. So, let’s see 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, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the largest position in Corenergy Infrastructure Trust Inc (NYSE:CORR), worth close to $2.1 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $1.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Corenergy Infrastructure Trust Inc (NYSE:CORR), around 0.0031% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.0028 percent of its 13F equity portfolio to CORR.
Judging by the fact that Corenergy Infrastructure Trust Inc (NYSE:CORR) has witnessed a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of funds who were dropping their positions entirely by the end of the first quarter. Interestingly, Israel Englander’s Millennium Management said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $0.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dumped about $0.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Corenergy Infrastructure Trust Inc (NYSE:CORR) but similarly valued. These stocks are Lumos Pharma, Inc. (NASDAQ:LUMO), OpGen, Inc. (NASDAQ:OPGN), CLPS Incorporation (NASDAQ:CLPS), AstroNova, Inc. (NASDAQ:ALOT), HMN Financial, Inc. (NASDAQ:HMNF), Weidai Ltd. (NYSE:WEI), and Martin Midstream Partners L.P. (NASDAQ:MMLP). This group of stocks’ market caps are similar to CORR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LUMO | 4 | 17428 | -5 |
| OPGN | 3 | 339 | 2 |
| CLPS | 2 | 321 | -1 |
| ALOT | 6 | 17218 | -1 |
| HMNF | 3 | 17961 | 0 |
| WEI | 2 | 369 | 1 |
| MMLP | 1 | 26 | 0 |
| Average | 3 | 7666 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $5 million in CORR’s case. AstroNova, Inc. (NASDAQ:ALOT) is the most popular stock in this table. On the other hand Martin Midstream Partners L.P. (NASDAQ:MMLP) is the least popular one with only 1 bullish hedge fund positions. Corenergy Infrastructure Trust Inc (NYSE:CORR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CORR is 67.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately CORR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CORR were disappointed as the stock returned -1.5% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Corenergy Infrastructure Trust Inc. (NYSE:CORR)
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Disclosure: None. This article was originally published at Insider Monkey.
