Is EQT Midstream Partners LP (EQM) A Good Stock To Buy?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.

Is EQT Midstream Partners LP (NYSE:EQM) a first-rate investment now? Prominent investors are taking an optimistic view. The number of long hedge fund bets moved up by 1 in recent months. EQM was in 13 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with EQM holdings at the end of the previous 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 Marvell Technology Group Ltd. (NASDAQ:MRVL), Aqua America Inc (NYSE:WTR), and Dunkin Brands Group Inc (NASDAQ:DNKN) to gather more data points.

Now, let’s go over the fresh action surrounding EQT Midstream Partners LP (NYSE:EQM).

What does the smart money think about EQT Midstream Partners LP (NYSE:EQM)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Stuart J. Zimmer’s Zimmer Partners has the biggest position in EQT Midstream Partners LP (NYSE:EQM), worth close to $31.1 million, comprising 2.4% of its total 13F portfolio. The second largest stake is held by Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $10.4 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that are bullish comprise Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Millennium Management Subsidiary’s Green Arrow Capital Management.

As one would reasonably expect, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the most valuable position in EQT Midstream Partners LP (NYSE:EQM). Millennium Management had $4 million invested in the company at the end of the quarter. David Atterbury’s Whetstone Capital Advisors also made a $2.9 million investment in the stock during the quarter. The only other fund with a brand new EQM position is Richard Driehaus’s Driehaus Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as EQT Midstream Partners LP (NYSE:EQM) but similarly valued. We will take a look at Marvell Technology Group Ltd. (NASDAQ:MRVL), Aqua America Inc (NYSE:WTR), Dunkin Brands Group Inc (NASDAQ:DNKN), and B/E Aerospace Inc (NASDAQ:BEAV). This group of stocks’ market caps resemble EQM’s market cap.

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 $621 million. That figure was $73 million in EQM’s case. B/E Aerospace Inc (NASDAQ:BEAV) is the most popular stock in this table. On the other hand Aqua America Inc (NYSE:WTR) is the least popular one with only 11 bullish hedge fund positions. EQT Midstream Partners LP (NYSE:EQM) 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 BEAV might be a better candidate to consider a long position.