Hedge Funds Are Buying Viper Energy Partners LP (VNOM)

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 September 30 holdings, data that is available nowhere else. Should you consider Viper Energy Partners LP (NASDAQ:VNOM) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Viper Energy Partners LP (NASDAQ:VNOM) was in 12 hedge funds’ portfolios at the end of the third quarter of 2018. VNOM investors should pay attention to an increase in hedge fund sentiment in recent months. There were 10 hedge funds in our database with VNOM positions at the end of the previous quarter. Our calculations also showed that vnom isn’t among the 30 most popular stocks among hedge funds.

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.

Charles Davidson - Wexford Capital

Let’s take a glance at the new hedge fund action encompassing Viper Energy Partners LP (NASDAQ:VNOM).

What have hedge funds been doing with Viper Energy Partners LP (NASDAQ:VNOM)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards VNOM over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

No of Hedge Funds with VNOM Positions

Among these funds, Wexford Capital held the most valuable stake in Viper Energy Partners LP (NASDAQ:VNOM), which was worth $59.4 million at the end of the third quarter. On the second spot was Millennium Management which amassed $34.1 million worth of shares. Moreover, Cardinal Capital, Arrowstreet Capital, and PEAK6 Capital Management were also bullish on Viper Energy Partners LP (NASDAQ:VNOM), allocating a large percentage of their portfolios to this stock.

Now, key money managers have been driving this bullishness. Soros Fund Management, managed by George Soros, assembled the most outsized position in Viper Energy Partners LP (NASDAQ:VNOM). Soros Fund Management had $3.2 million invested in the company at the end of the quarter. Robert Jaffe’s Force Capital also made a $0.9 million investment in the stock during the quarter. The other funds with brand new VNOM positions are Steve Cohen’s Point72 Asset Management, Noam Gottesman’s GLG Partners, and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Viper Energy Partners LP (NASDAQ:VNOM) but similarly valued. These stocks are Loxo Oncology Inc (NASDAQ:LOXO), Primerica, Inc. (NYSE:PRI), Avnet, Inc. (NASDAQ:AVT), and Compania Cervecerias Unidas S.A. (NYSE:CCU). This group of stocks’ market caps are closest to VNOM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LOXO 30 909394 -2
PRI 12 467230 3
AVT 23 802892 7
CCU 14 100073 3
Average 19.75 569897 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $570 million. That figure was $140 million in VNOM’s case. Loxo Oncology Inc (NASDAQ:LOXO) is the most popular stock in this table. On the other hand Primerica, Inc. (NYSE:PRI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Viper Energy Partners LP (NASDAQ:VNOM) is even less popular than PRI. 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.