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Is Archrock Partners LP (APLP) A Good Stock To Buy?

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The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Archrock Partners LP (NASDAQ:APLP) from the perspective of those successful funds.

Archrock Partners LP (NASDAQ:APLP) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare APLP to other stocks including New Mountain Finance Corp. (NYSE:NMFC), Hibbett Sports, Inc. (NASDAQ:HIBB), and NutriSystem Inc. (NASDAQ:NTRI) to get a better sense of its popularity.

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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, let’s analyze the latest action surrounding Archrock Partners LP (NASDAQ:APLP).

Hedge fund activity in Archrock Partners LP (NASDAQ:APLP)

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in APLP heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

When looking at the institutional investors followed by Insider Monkey, Magnetar Capital, led by Alec Litowitz and Ross Laser, holds the number one position in Archrock Partners LP (NASDAQ:APLP). Magnetar Capital has a $18.6 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Contrarian Capital, led by Jon Bauer, holding a $1.5 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Millennium Management, one of the 10 largest hedge funds in the world, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’ Renaissance Technologies. 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.

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