Should You Avoid Brookfield Infrastructure Partners L.P. (BIP)?

Is Brookfield Infrastructure Partners L.P. (NYSE:BIP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Brookfield Infrastructure Partners L.P. (NYSE:BIP) a buy right now? Prominent investors are categorically in a pessimistic mood. The number of long hedge fund investments slashed by 1 recently. There were 6 hedge funds in our database with BIP holdings at the end of the 2016 third 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 The Valspar Corporation (NYSE:VAL), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), and Brixmor Property Group Inc (NYSE:BRX) to gather more data points.

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Now, let’s review the recent action encompassing Brookfield Infrastructure Partners L.P. (NYSE:BIP).

Hedge fund activity in Brookfield Infrastructure Partners L.P. (NYSE:BIP)

At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 14% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in BIP over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Eric Sprott’s Sprott Asset Management holds the largest position in Brookfield Infrastructure Partners L.P. (NYSE:BIP). According to regulatory filings, the fund has a $19.4 million position in the stock. Sprott Asset Management also holds a major options position, valued at $12.1 million. The second largest equity stake is held by Murray Stahl’s Horizon Asset Management, which manages a $4.05 million position. Some other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Russell Lucas’ Lucas Capital Management and Matthew Hulsizer’s PEAK6 Capital Management. We should note that two of these hedge funds (Sprott Asset Management and Sprott Asset Management) 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.

Seeing as Brookfield Infrastructure Partners L.P. (NYSE:BIP) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who sold off their full holdings last quarter. Interestingly, Renaissance Technologies, which is one of the largest hedge funds in the world, cashed in the biggest stake of all the hedgies watched by Insider Monkey, worth close to $9.2 million in stock. George Hall’s fund, Clinton Group, also dumped its stock, about $1.3 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Brookfield Infrastructure Partners L.P. (NYSE:BIP) but similarly valued. These stocks are The Valspar Corporation (NYSE:VAL), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Brixmor Property Group Inc (NYSE:BRX), and Lululemon Athletica inc. (NASDAQ:LULU). This group of stocks’ market values match BIP’s market value.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1.05 billion. That figure was a meager $39 million in BIP’s case. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is the most popular stock in this table. On the other hand Brixmor Property Group Inc (NYSE:BRX) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Brookfield Infrastructure Partners L.P. (NYSE:BIP) is even less popular than BRX. 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.

Disclosure: None