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Hedge Funds Are Buying Noble Midstream Partners LP (NBLX)

At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Noble Midstream Partners LP (NYSE:NBLX) makes for a good investment right now.

Is Noble Midstream Partners LP (NYSE:NBLX) ready to rally soon? Money managers are getting more bullish. The number of long hedge fund bets moved up by 2 recently. Our calculations also showed that NBLX isn’t among the 30 most popular stocks among hedge funds. NBLX was in 6 hedge funds’ portfolios at the end of September. There were 4 hedge funds in our database with NBLX positions at the end of the previous quarter.

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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 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.

RENAISSANCE TECHNOLOGIES

Let’s go over the new hedge fund action surrounding Noble Midstream Partners LP (NYSE:NBLX).

What have hedge funds been doing with Noble Midstream Partners LP (NYSE:NBLX)?

Heading into the fourth quarter of 2018, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NBLX over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds NBLX Positions

The largest stake in Noble Midstream Partners LP (NYSE:NBLX) was held by Perella Weinberg Partners, which reported holding $18.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $6.7 million position. Other investors bullish on the company included Citadel Investment Group, BP Capital, and Millennium Management.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Noble Midstream Partners LP (NYSE:NBLX) headfirst. BP Capital, managed by T Boone Pickens, assembled the most outsized position in Noble Midstream Partners LP (NYSE:NBLX). BP Capital had $1.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.3 million investment in the stock during the quarter. The other funds with brand new NBLX positions are Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Noble Midstream Partners LP (NYSE:NBLX) but similarly valued. These stocks are Pretium Resources Inc (NYSE:PVG), Sandy Spring Bancorp Inc. (NASDAQ:SASR), Web.com Group, Inc. (NASDAQ:WEB), and Continental Building Products Inc (NYSE:CBPX). This group of stocks’ market caps match NBLX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PVG 17 96787 2
SASR 12 90603 -1
WEB 24 481203 1
CBPX 18 115523 -2
Average 17.75 196029 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $30 million in NBLX’s case. Web.com Group, Inc. (NYSE:WEB) is the most popular stock in this table. On the other hand Sandy Spring Bancorp Inc. (NASDAQ:SASR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Noble Midstream Partners LP (NYSE:NBLX) is even less popular than SASR. 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. This article was originally published at Insider Monkey.

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