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: Usa Compression Partners LP (NYSE:USAC) .
Usa Compression Partners LP (NYSE:USAC) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. USAC was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. 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 8Point3 Energy Partners LP (NASDAQ:CAFD), The Andersons, Inc. (NASDAQ:ANDE), and Repligen Corporation (NASDAQ:RGEN) to gather more data points.
Follow Usa Compression Partners Lp (NYSE:USAC)
Follow Usa Compression Partners Lp (NYSE:USAC)
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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With all of this in mind, we’re going to take a glance at the key action surrounding Usa Compression Partners LP (NYSE:USAC).
How are hedge funds trading Usa Compression Partners LP (NYSE:USAC)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in USAC heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Brian C. Freckmann’s Lyon Street Capital has the biggest position in Usa Compression Partners LP (NYSE:USAC), worth close to $3.6 million, comprising 1.7% of its total 13F portfolio. Coming in second is Matthew Hulsizer of PEAK6 Capital Management, with a $2.3 million call position. Other professional money managers that hold long positions include Mark Coe’s Coe Capital Management, Russell Lucas’ Lucas Capital Management and Jim Simons’ Renaissance Technologies, one of the largest hedge funds in the world. 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.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Usa Compression Partners LP (NYSE:USAC) but similarly valued. We will take a look at 8Point3 Energy Partners LP (NASDAQ:CAFD), The Andersons, Inc. (NASDAQ:ANDE), Repligen Corporation (NASDAQ:RGEN), and Royce Value Trust Inc (NYSE:RVT). This group of stocks’ market values match USAC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAFD | 12 | 47538 | 4 |
| ANDE | 12 | 48680 | 3 |
| RGEN | 14 | 63917 | 0 |
| RVT | 5 | 4413 | 1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $11 million in USAC’s case. Repligen Corporation (NASDAQ:RGEN) is the most popular stock in this table. On the other hand Royce Value Trust Inc (NYSE:RVT) is the least popular one with only 5 bullish hedge fund positions. Usa Compression Partners LP (NYSE:USAC) 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 RGEN might be a better candidate to consider taking a long position in.
Disclosure: None
