Is MPLX LP (NYSE:MPLX) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have 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. More recently the top 30 mid-cap stocks (market caps between $1 billion and $10 billion) among hedge funds delivered an average return of 18% during the last four quarters (S&P 500 Index funds returned only 7.6% during the same period).
Is MPLX LP (NYSE:MPLX) a buy here? The best stock pickers are becoming more confident. The number of long hedge fund bets went up by 2 lately. 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 KLA-Tencor Corporation (NASDAQ:KLAC), Waters Corporation (NYSE:WAT), and Coach, Inc. (NYSE:COH) 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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What have hedge funds been doing with MPLX LP (NYSE:MPLX)?
Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a 17% rise from one quarter earlier and the second straight with a rise. Below, you can check out the change in hedge fund sentiment towards MPLX over the last 5 quarters. So, let’s review 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, Stockbridge Partners, led by Sharlyn C. Heslam, holds the biggest position in MPLX LP (NYSE:MPLX). Stockbridge Partners has a $143.5 million position in the stock, comprising 6.9% of its 13F portfolio. The second most bullish fund manager is Zimmer Partners, led by Stuart J. Zimmer, which holds a $35.4 million position. Remaining professional money managers with similar optimism comprise James Dondero’s Highland Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Jim Simons’ Renaissance Technologies. 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.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Balyasny Asset Management initiated the most valuable position in MPLX LP (NYSE:MPLX). Balyasny Asset Management had $16.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $13.2 million position during the quarter. The other funds with new positions in the stock are Charles Davidson’s Wexford Capital and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as MPLX LP (NYSE:MPLX) but similarly valued. We will take a look at KLA-Tencor Corporation (NASDAQ:KLAC), Waters Corporation (NYSE:WAT), Coach, Inc. (NYSE:COH), and BRF Brasil Foods SA (ADR) (NYSE:BRFS). All of these stocks’ market caps are similar to MPLX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KLAC | 46 | 968361 | 16 |
| WAT | 29 | 631518 | 0 |
| COH | 32 | 220693 | -4 |
| BRFS | 8 | 172293 | -1 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $498 million. That figure was $259 million in MPLX’s case. KLA-Tencor Corporation (NASDAQ:KLAC) is the most popular stock in this table. On the other hand BRF Brasil Foods SA (ADR) (NYSE:BRFS) is the least popular one with only 8 bullish hedge fund positions. MPLX LP (NYSE:MPLX) 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 KLAC might be a better candidate to consider taking a long position in.
Disclosure: None
