Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Holly Energy Partners, L.P. (NYSE:HEP) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Holly Energy Partners, L.P. (NYSE:HEP) was in 5 hedge funds’ portfolios at the end of the third quarter of 2015. There were 4 hedge funds in our database with Holly Energy Partners, L.P. (NYSE:HEP) positions at the end of the previous 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 Tessera Technologies, Inc. (NASDAQ:TSRA), Korn/Ferry International (NYSE:KFY), and LogMeIn Inc (NASDAQ:LOGM) to gather more data points.
In the eyes of most shareholders, hedge funds are seen as slow, old investment vehicles of years past. While there are greater than 8,000 funds with their doors open today, we hone in on the bigwigs of this club, around 700 funds. Most estimates calculate that this group of people watch over most of the hedge fund industry’s total asset base, and by tailing their highest performing picks, Insider Monkey has brought to light many investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, we’re going to review the fresh action encompassing Holly Energy Partners, L.P. (NYSE:HEP).
Hedge fund activity in Holly Energy Partners, L.P. (NYSE:HEP)
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 25% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in Holly Energy Partners, L.P. (NYSE:HEP), worth close to $2.2 million, accounting for less than 0.1% of its total 13F portfolio. Coming in second is PEAK6 Capital Management, led by Matthew Hulsizer, holding a $1.2 million position of call options underlying shares of the company; less than 0.1% of its 13F portfolio is allocated to the stock. Other peers with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Ken Griffin’s Citadel Investment Group.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Arrowstreet Capital made a $0.3 million investment in the stock during the quarter. The other funds with brand new Holly Energy positions are Springbok Capital and PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Holly Energy Partners, L.P. (NYSE:HEP). We will take a look at Tessera Technologies, Inc. (NASDAQ:TSRA), Korn/Ferry International (NYSE:KFY), LogMeIn Inc (NASDAQ:LOGM), and Gannett Co., Inc. (NYSE:GCI). This group of stocks’ market values is close to Holly Energy Partners, L.P. (NYSE:HEP)’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was a miniscule $4 million in Holly Energy Partners, L.P. (NYSE:HEP)’s case. Tessera Technologies, Inc. (NASDAQ:TSRA) is the most popular stock in this table. On the other hand, Gannett Co., Inc. (NYSE:GCI) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks, Holly Energy Partners, L.P. (NYSE:HEP) is even less popular than Gannett Co., Inc. (NYSE:GCI). 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.