The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. What do these smart investors think about Westlake Chemical Partners LP (NYSE:WLKP)?
Is Westlake Chemical Partners LP (NYSE:WLKP) a bargain? Money managers are betting on the stock. The number of long hedge fund positions rose by 1 recently. Our calculations also showed that WLKP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the bigwigs of this club, around 750 funds. Most estimates calculate that this group of people command bulk of all hedge funds’ total asset base, and by monitoring their inimitable investments, Insider Monkey has uncovered a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update.
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example, Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind, we’re going to take a gander at the new hedge fund action surrounding Westlake Chemical Partners LP (NYSE:WLKP).
What have hedge funds been doing with Westlake Chemical Partners LP (NYSE:WLKP)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WLKP over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the number one position in Westlake Chemical Partners LP (NYSE:WLKP). Arrowstreet Capital has a $5.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second-largest stake is held by Matthew Hulsizer of PEAK6 Capital Management, with a $0.2 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 comprise John Zaro’s Bourgeon Capital, Paul Marshall and Ian Wace’s Marshall Wace. In terms of the portfolio weights assigned to each position, Bourgeon Capital allocated the biggest weight to Westlake Chemical Partners LP (NYSE:WLKP), around 0.04% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to WLKP.
Consequently, key money managers have been driving this bullishness. Bourgeon Capital, managed by John Zaro, initiated the most valuable position in Westlake Chemical Partners LP (NYSE:WLKP). Bourgeon Capital had $0.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also initiated a $0 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Westlake Chemical Partners LP (NYSE:WLKP) but similarly valued. We will take a look at Monotype Imaging Holdings Inc. (NASDAQ:TYPE), Mercer International Inc. (NASDAQ:MERC), Zumiez Inc. (NASDAQ:ZUMZ), and Cango Inc. (NYSE:CANG). This group of stocks’ market valuations is closest to WLKP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TYPE | 21 | 140809 | 2 |
| MERC | 13 | 142219 | -3 |
| ZUMZ | 18 | 76921 | 2 |
| CANG | 1 | 306 | 0 |
| Average | 13.25 | 90064 | 0.25 |
View the table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $6 million in WLKP’s case. Monotype Imaging Holdings Inc. (NASDAQ:TYPE) is the most popular stock in this table. On the other hand, Cango Inc. (NYSE:CANG) is the least popular one with only 1 bullish hedge fund position. Westlake Chemical Partners LP (NYSE:WLKP) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, WLKP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WLKP investors were disappointed as the stock returned -2.6% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large-cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
