Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Western Gas Partners, LP (NYSE:WES).
Western Gas Partners, LP was in 6 hedge funds’ portfolios at the end of September. WES investors should be aware of an increase in hedge fund interest of late. There were 4 hedge funds in our database with WES positions at the end of the previous quarter. At the end of this article we will also compare WES to other stocks, including Israel Chemicals Ltd. (NYSE:ICL), Msci Inc (NYSE:MSCI), and American Capital Agency Corp. (NASDAQ:AGNC) to get a better sense of its popularity.
Follow Western Midstream Partners Lp (NYSE:WES)
Follow Western Midstream Partners Lp (NYSE:WES)
Today there are tons of methods shareholders have at their disposal to value stocks. A pair of the most useful methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a significant margin (see the details here).
With all of this in mind, let’s analyze the new action encompassing Western Gas Partners, LP (NYSE:WES).
What does the smart money think about Western Gas Partners, LP (NYSE:WES)?
At the Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in Western Gas Partners, LP (NYSE:WES), worth close to $22.8 million, corresponding to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Balyasny Asset Management, led by Dmitry Balyasny, holding a $3.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions consist of George Hall’s Clinton Group, Stuart J. Zimmer’s Zimmer Partners and Matthew Hulsizer’s PEAK6 Capital Management.
Consequently, specific money managers have jumped into Western Gas Partners, LP (NYSE:WES) headfirst. Balyasny Asset Management assembled the largest position in Western Gas Partners, LP (NYSE:WES). Zimmer Partners also initiated a $1.9 million position during the quarter. The other funds with brand new WES positions are Ken Griffin’s Citadel Investment Group and PEAK6 Capital Management.
Let’s now review 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 Israel Chemicals Ltd. (NYSE:ICL), Msci Inc (NYSE:MSCI), American Capital Agency Corp. (NASDAQ:AGNC), and Centene Corp (NYSE:CNC). 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 |
|---|---|---|---|
| ICL | 5 | 154799 | -1 |
| MSCI | 26 | 1069176 | 2 |
| AGNC | 26 | 472707 | 7 |
| CNC | 37 | 489392 | 15 |
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $547 million. That figure was just $33 million in WES’s case. Centene Corp (NYSE:CNC) is the most popular stock in this table, while Israel Chemicals Ltd. (NYSE:ICL) is the least popular one with only 5 bullish hedge fund positions. Western Gas Partners, LP (NYSE:WES) 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 CNC might be a better candidate to consider a long position.
