As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Usa Compression Partners LP (NYSE:USAC) in this article.
Hedge fund interest in Usa Compression Partners LP (NYSE:USAC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Global Indemnity plc (NASDAQ:GBLI), Urstadt Biddle Properties Inc (NYSE:UBA), and Solar Capital Ltd. (NASDAQ:SLRC) to gather more data points.
Follow Usa Compression Partners Lp (NYSE:USAC)
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In the financial world, there are many signals stock market investors have at their disposal to evaluate stocks. A couple of the most underrated signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite fund managers can outpace the broader indices by a very impressive amount (see the details here).
Keeping this in mind, we’re going to take a glance at the key action surrounding Usa Compression Partners LP (NYSE:USAC).
What does the smart money think about Usa Compression Partners LP (NYSE:USAC)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Russell Lucas’s Lucas Capital Management has the biggest position in Usa Compression Partners LP (NYSE:USAC), worth close to $2.1 million, accounting for 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is PEAK6 Capital Management, led by Matthew Hulsizer, holding a $1.5 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism contain Jim Simons’s Renaissance Technologies and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partnerst.
We view hedge fund activity in the stock as unfavorable, despite the fact that three funds have increased their investement in the company, while only one, Grt Capital Partners, cut its stake. The biggest increase was reported by Matthew Hulsizer’s PEAK6 Capital Management, up by 778% during the quarter, while Jim Simons’ Renaissance Technologies was right behind with a 374% increase to 88,013 shares valued at $1.27 million. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Usa Compression Partners LP (NYSE:USAC) but similarly valued. These stocks are Global Indemnity plc (NASDAQ:GBLI), Urstadt Biddle Properties Inc (NYSE:UBA), Solar Capital Ltd. (NASDAQ:SLRC), and Team, Inc. (NYSE:TISI). This group of stocks’ market caps are closest to USAC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GBLI | 5 | 24023 | 1 |
| UBA | 5 | 8256 | -3 |
| SLRC | 14 | 41220 | -3 |
| TISI | 15 | 74130 | 5 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was a meager $6 million in USAC’s case. Team, Inc. (NYSE:TISI) is the most popular stock in this table. On the other hand Global Indemnity plc (NASDAQ:GBLI) and Urstadt Biddle Properties Inc (NYSE:UBA) are the least popular ones with only 5 bullish hedge fund positions. Compared to these stocks Usa Compression Partners LP (NYSE:USAC) is even less popular than GBLI. 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. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
