Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by successful investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
In this article, we’ll see whether Genesis Energy, L.P. (NYSE:GEL) represents a good investment, based on its popularity among hedge fund investors. Overall, the sentiment towards the stock among investors in our database remained flat during the third quarter. This is usually a negative indicator. 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 Match Group Inc(NASDAQ:MTCH), Cullen/Frost Bankers, Inc. (NYSE:CFR), and Orbital ATK Inc (NYSE:OA) to gather more data points.
Follow Genesis Energy Lp (NYSE:GEL)
Follow Genesis Energy Lp (NYSE:GEL)
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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Now, let’s take a look at the latest action regarding Genesis Energy, L.P. (NYSE:GEL).
Hedge fund activity in Genesis Energy, L.P. (NYSE:GEL)
At the end of the third quarter, a total of seven of the hedge funds tracked by Insider Monkey held long positions in Genesis Energy, unchanged from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GEL over the last five quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bernard Selz’s Selz Capital holds the number one position in Genesis Energy, L.P. (NYSE:GEL). Selz Capital has a $13.5 million position in the stock, comprising 3.1% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies, with a $2.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Robert B. Gillam’s McKinley Capital Management, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are 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.
Seeing as Genesis Energy, L.P. (NYSE:GEL) has gone through a decline in interest from hedge fund managers, it’s easy to see that there were a few funds who sold off their entire stakes in the third quarter. It’s worth mentioning that Daniel S. Och’s OZ Management dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $1.5 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund cut about $1 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Genesis Energy, L.P. (NYSE:GEL). We will take a look at Match Group Inc(NASDAQ:MTCH), Cullen/Frost Bankers, Inc. (NYSE:CFR), Orbital ATK Inc (NYSE:OA), and Graphic Packaging Holding Company (NYSE:GPK). This group of stocks’ market valuations are similar to GEL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTCH | 19 | 90149 | 3 |
| CFR | 13 | 65558 | -1 |
| OA | 33 | 507862 | 1 |
| GPK | 32 | 936168 | -4 |
As you can see these stocks had an average of 24 funds with bullish positions and the average amount invested in these stocks was $400 million. That figure was just $22 million in GEL’s case. Orbital ATK Inc (NYSE:OA) is the most popular stock in this table. On the other hand Cullen/Frost Bankers, Inc. (NYSE:CFR) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Genesis Energy, L.P. (NYSE:GEL) is even less popular than CFR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
