What Does Hedge Fund Sentiment Say About Viper Energy Partners LP (VNOM)?

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. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Viper Energy Partners LP (NASDAQ:VNOM) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Viper Energy Partners LP (NASDAQ:VNOM) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare VNOM to other stocks including S & T Bancorp Inc (NASDAQ:STBA), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), and Cubic Corporation (NYSE:CUB) to get a better sense of its popularity.

At the moment there are plenty of tools stock market investors use to grade their holdings. A couple of the most useful tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outperform the S&P 500 by a very impressive margin (see the details here).

With all of this in mind, we’re going to take a look at the new action surrounding Viper Energy Partners LP (NASDAQ:VNOM).

What does the smart money think about Viper Energy Partners LP (NASDAQ:VNOM)?

Heading into Q4, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, MSDC Management, managed by Marc Lisker, Glenn Fuhrman and John Phelan, holds the biggest position in Viper Energy Partners LP (NASDAQ:VNOM). MSDC Management has a $9.2 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Wexford Capital, managed by Charles Davidson, which holds a $7.2 million position; 1.4% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism encompass Kevin D. Eng’s Columbus Hill Capital Management, Jim Simons’ Renaissance Technologies and Matthew Hulsizer’s PEAK6 Capital Management.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Harvard Management Co. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was PEAK6 Capital Management).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Viper Energy Partners LP (NASDAQ:VNOM) but similarly valued. We will take a look at S & T Bancorp Inc (NASDAQ:STBA), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Cubic Corporation (NYSE:CUB), and Adeptus Health Inc (NYSE:ADPT). All of these stocks’ market caps match VNOM’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $21 million in VNOM’s case. Adeptus Health Inc (NYSE:ADPT) is the most popular stock in this table, while S & T Bancorp Inc (NASDAQ:STBA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Viper Energy Partners LP (NASDAQ:VNOM) is even less popular than STBA. Considering that hedge funds aren’t fond of this stock in relation to other companies mentioned 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.