Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Hi-Crush Partners LP (NYSE:HCLP) .
Is Hi-Crush Partners LP (NYSE:HCLP) worth your attention right now? The smart money is indeed getting less optimistic. The number of long hedge fund investments suffered a reduction of 2 lately. There were 12 hedge funds in our database with HCLP positions 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 Tile Shop Hldgs, Inc. (NASDAQ:TTS), CenterState Banks Inc (NASDAQ:CSFL), and Continental Building Products Inc (NYSE:CBPX) 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.
Image courtesy Pixabay
Keeping this in mind, let’s take a look at the fresh action regarding Hi-Crush Partners LP (NYSE:HCLP).
What does the smart money think about Hi-Crush Partners LP (NYSE:HCLP)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards HCLP over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Dmitry Balyasny’s Balyasny Asset Management has the largest position in Hi-Crush Partners LP (NYSE:HCLP), worth close to $31.3 million. On Balyasny Asset Management’s heels is Millennium Management, one of the 10 largest hedge funds in the world, which holds a $17.4 million position. Other peers with similar optimism contain Bryant Regan’s Lafitte Capital Management, GLG Partners and Larry Foley and Paul Farrell’s Bronson Point Partners. 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.
Judging by the fact that Hi-Crush Partners LP (NYSE:HCLP) has weathered a decline in interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Phil Frohlich’s Prescott Group Capital Management got rid of the biggest stake of all the investors tracked by Insider Monkey, worth an estimated $2.1 million in stock, and Leon Cooperman’s Omega Advisors was right behind this move, as the fund cut about $1.3 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hi-Crush Partners LP (NYSE:HCLP) but similarly valued. We will take a look at Tile Shop Hldgs, Inc. (NASDAQ:TTS), CenterState Banks Inc (NASDAQ:CSFL), Continental Building Products Inc (NYSE:CBPX), and Hanmi Financial Corp (NASDAQ:HAFC). This group of stocks’ market values are closest to HCLP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTS | 15 | 91252 | -6 |
| CSFL | 18 | 56172 | 5 |
| CBPX | 26 | 126843 | 0 |
| HAFC | 8 | 48653 | 1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $73 million in HCLP’s case. Continental Building Products Inc (NYSE:CBPX) is the most popular stock in this table. On the other hand Hanmi Financial Corp (NASDAQ:HAFC) is the least popular one with only 8 bullish hedge fund positions. Hi-Crush Partners LP (NYSE:HCLP) 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 CBPX might be a better candidate to consider taking a long position in.
Disclosure: None
