Hedge Funds Are Selling BP Midstream Partners LP (BPMP)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about BP Midstream Partners LP (NYSE:BPMP)?

Is BP Midstream Partners LP (NYSE:BPMP) undervalued? Investors who are in the know are in a bearish mood. The number of long hedge fund bets retreated by 1 recently. Our calculations also showed that BPMP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a lot of metrics stock market investors have at their disposal to size up their stock investments. Two of the most under-the-radar metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the S&P 500 by a solid amount (see the details here).

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the key hedge fund action encompassing BP Midstream Partners LP (NYSE:BPMP).

How are hedge funds trading BP Midstream Partners LP (NYSE:BPMP)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in BPMP over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, Arrowstreet Capital was the largest shareholder of BP Midstream Partners LP (NYSE:BPMP), with a stake worth $4.7 million reported as of the end of September. Trailing Arrowstreet Capital was Heronetta Management, which amassed a stake valued at $1.7 million. Citadel Investment Group, Citadel Investment Group, and PEAK6 Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Heronetta Management allocated the biggest weight to BP Midstream Partners LP (NYSE:BPMP), around 2.08% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to BPMP.

Seeing as BP Midstream Partners LP (NYSE:BPMP) has witnessed a decline in interest from the smart money, we can see that there were a few hedgies who sold off their full holdings last quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest position of all the hedgies watched by Insider Monkey, comprising close to $3.1 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BP Midstream Partners LP (NYSE:BPMP) but similarly valued. These stocks are Phibro Animal Health Corp (NASDAQ:PAHC), Health Catalyst, Inc (NASDAQ:HCAT), Infinera Corp. (NASDAQ:INFN), and Retail Opportunity Investments Corp (NASDAQ:ROIC). All of these stocks’ market caps match BPMP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PAHC 16 53809 0
HCAT 14 90051 6
INFN 14 203469 -3
ROIC 18 43584 -3
Average 15.5 97728 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $7 million in BPMP’s case. Retail Opportunity Investments Corp (NASDAQ:ROIC) is the most popular stock in this table. On the other hand Health Catalyst, Inc (NASDAQ:HCAT) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks BP Midstream Partners LP (NYSE:BPMP) is even less popular than HCAT. Hedge funds clearly dropped the ball on BPMP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on BPMP as the stock returned 38.4% so far in the second quarter and outperformed the market by an even larger margin.

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