Did Hedge Funds Drop The Ball On Usa Compression Partners LP (USAC)?

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 December 31 holdings, data that is available nowhere else. Should you consider Usa Compression Partners LP (NYSE:USAC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Hedge fund interest in Usa Compression Partners LP (NYSE:USAC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare USAC to other stocks including TriMas Corp (NASDAQ:TRS), Redwood Trust, Inc. (NYSE:RWT), and YETI Holdings, Inc. (NYSE:YETI) to get a better sense of its popularity.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Charles Davidson - Wexford Capital

We’re going to take a look at the fresh hedge fund action surrounding Usa Compression Partners LP (NYSE:USAC).

How have hedgies been trading Usa Compression Partners LP (NYSE:USAC)?

At Q4’s end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2018. By comparison, 4 hedge funds held shares or bullish call options in USAC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


More specifically, Perella Weinberg Partners was the largest shareholder of Usa Compression Partners LP (NYSE:USAC), with a stake worth $5.7 million reported as of the end of December. Trailing Perella Weinberg Partners was Lucas Capital Management, which amassed a stake valued at $0.5 million. Wexford Capital, Citadel Investment Group, and PEAK6 Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

https://www.insidermonkey.com/blog/did-hedge-funds-drop-the-ball-on-usa-compression-partners-lp-usac-743285/Seeing as Usa Compression Partners LP (NYSE:USAC) has faced falling interest from the smart money, it’s easy to see that there was a specific group of money managers who were dropping their positions entirely in the third quarter. It’s worth mentioning that Jim Simons’s Renaissance Technologies sold off the biggest investment of the 700 funds followed by Insider Monkey, valued at an estimated $5.5 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund sold off about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Usa Compression Partners LP (NYSE:USAC) but similarly valued. We will take a look at TriMas Corp (NASDAQ:TRS), Redwood Trust, Inc. (NYSE:RWT), YETI Holdings, Inc. (NYSE:YETI), and EnPro Industries, Inc. (NYSE:NPO). This group of stocks’ market values match USAC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRS 16 112325 0
RWT 12 83440 0
YETI 10 27704 10
NPO 15 117649 -1
Average 13.25 85280 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $7 million in USAC’s case. TriMas Corp (NASDAQ:TRS) is the most popular stock in this table. On the other hand YETI Holdings, Inc. (NYSE:YETI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Usa Compression Partners LP (NYSE:USAC) is even less popular than YETI. Hedge funds clearly dropped the ball on USAC as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on USAC as the stock returned 40.8% and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.