The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Western Gas Partners, LP (NYSE:WES).
Western Gas Partners, LP (NYSE:WES) was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. WES has experienced an increase in enthusiasm from smart money recently. There were 5 hedge funds in our database with WES positions at the end of the second 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 Sabre Corp (NASDAQ:SABR), UGI Corp (NYSE:UGI), and Affiliated Managers Group, Inc. (NYSE:AMG) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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What have hedge funds been doing with Western Gas Partners, LP (NYSE:WES)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 60% jump from the second quarter of 2016. On the other hand, there were a total of 4 hedge funds with a bullish position in WES at the beginning of this year, which has since shot up by 100%. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, T Boone Pickens’ BP Capital has the number one position in Western Gas Partners, LP (NYSE:WES), worth close to $8.2 million, comprising 2.9% of its total 13F portfolio. On BP Capital’s heels is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $7.3 million position. Other hedge funds and institutional investors that hold long positions contain Charles Davidson’s Wexford Capital, Richard Driehaus’ Driehaus Capital, and Matthew Hulsizer’s PEAK6 Capital Management. We should note that BP Capital is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
With general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Wexford Capital, led by Charles Davidson, created the largest position in Western Gas Partners, LP (NYSE:WES). Wexford Capital had $7.1 million invested in the company at the end of the quarter. Richard Driehaus’ Driehaus Capital also made a $4.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Western Gas Partners, LP (NYSE:WES) but similarly valued. We will take a look at Sabre Corp (NASDAQ:SABR), UGI Corp (NYSE:UGI), Affiliated Managers Group, Inc. (NYSE:AMG), and NiSource Inc. (NYSE:NI). This group of stocks’ market valuations are closest to WES’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SABR | 29 | 1947191 | -7 |
| UGI | 16 | 310805 | -2 |
| AMG | 35 | 746567 | 1 |
| NI | 23 | 355910 | 5 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $840 million. That figure was just $35 million in WES’s case. Affiliated Managers Group, Inc. (NYSE:AMG) is the most popular stock in this table. On the other hand UGI Corp (NYSE:UGI) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Western Gas Partners, LP (NYSE:WES) is even less popular than UGI. 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.
Disclosure: None
