Is NGL Energy Partners LP (NGL) Going to Burn Investors?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards NGL Energy Partners LP (NYSE:NGL).

NGL Energy Partners LP (NYSE:NGL) investors should be aware of an increase in hedge fund sentiment of late. NGL was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 5 hedge funds in our database with NGL holdings at the end of the second quarter. 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 NetGear, Inc. (NASDAQ:NTGR), Marriott Vacations Worldwide Corp (NYSE:VAC), and Planet Fitness Inc (NYSE:PLNT) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How are hedge funds trading NGL Energy Partners LP (NYSE:NGL)?

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 20% increase from the previous quarter. The graph below displays the number of hedge funds with bullish positions in NGL over the last 5 quarters, which has fluctuated with each new quarter. So, let’s review 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, Dmitry Balyasny’s Balyasny Asset Management has the number one position in NGL Energy Partners LP (NYSE:NGL), worth close to $5.7 million. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, with a $3.2 million position. Remaining professional money managers that are bullish comprise James Dondero’s Highland Capital Management and George Hall’s Clinton Group. 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-micro-cap stocks.

As aggregate interest increased, key hedge funds have jumped into NGL Energy Partners LP (NYSE:NGL) headfirst. Balyasny Asset Management initiated the largest position in NGL Energy Partners LP (NYSE:NGL). The position held by Jim Simons’ Renaissance Technologies was also initiated during the third quarter. The only other fund with a new position in the stock was Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as NGL Energy Partners LP (NYSE:NGL) but similarly valued. We will take a look at NetGear, Inc. (NASDAQ:NTGR), Marriott Vacations Worldwide Corp (NYSE:VAC), Planet Fitness Inc (NYSE:PLNT), and Monro Muffler Brake Inc (NASDAQ:MNRO). All of these stocks’ market caps match NGL’s market cap.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $14 million in NGL’s case. Planet Fitness Inc (NYSE:PLNT) is the most popular stock in this table. On the other hand Marriott Vacations Worldwide Corp (NYSE:VAC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks NGL Energy Partners LP (NYSE:NGL) is even less popular than VAC. 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.

Disclosure: None