Is EQT Midstream Partners LP (NYSE:EQM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
EQT Midstream Partners LP (NYSE:EQM) was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. EQM has seen a decrease in hedge fund sentiment in recent months. There were 11 hedge funds in our database with EQM holdings at the end of the previous quarter. At the end of this article we will also compare EQM to other stocks including PerkinElmer, Inc. (NYSE:PKI), Braskem SA (ADR) (NYSE:BAK), and Owens Corning (NYSE:OC) to get a better sense of its popularity.
Follow Eqm Midstream Partners Lp (NYSE:EQM)
Follow Eqm Midstream Partners Lp (NYSE:EQM)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Keeping this in mind, we’re going to analyze the recent action surrounding EQT Midstream Partners LP (NYSE:EQM).
How are hedge funds trading EQT Midstream Partners LP (NYSE:EQM)?
Heading into the fourth quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 27% from the second quarter of 2016. On the other hand, there were a total of 6 hedge funds with a bullish position in EQM at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Stuart J. Zimmer’s Zimmer Partners has the largest position in EQT Midstream Partners LP (NYSE:EQM), worth close to $39.8 million, amounting to 1.1% of its total 13F portfolio. The second most bullish fund manager is William Michaelcheck of Mariner Investment Group, with a $6.9 million position; the fund has 3.6% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of one of the largest hedge funds in the world, Renaissance Technologies, Martin D. Sass’s MD Sass and Dmitry Balyasny’s Balyasny Asset Management. We should note that Zimmer Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because EQT Midstream Partners LP (NYSE:EQM) has sustained a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their entire stakes in the third quarter. It’s worth mentioning that George Hall’s Clinton Group cashed in the biggest investment of the “upper crust” of funds followed by Insider Monkey, worth about $4.9 million in stock. Richard Driehaus’s fund, Driehaus Capital, also dumped its stock, about $2.1 million worth of EQM shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as EQT Midstream Partners LP (NYSE:EQM) but similarly valued. We will take a look at PerkinElmer, Inc. (NYSE:PKI), Braskem SA (ADR) (NYSE:BAK), Owens Corning (NYSE:OC), and VimpelCom Ltd (ADR) (NYSE:VIP). This group of stocks’ market valuations are similar to EQM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PKI | 25 | 436280 | -1 |
| BAK | 8 | 45996 | 3 |
| OC | 35 | 1197532 | 1 |
| VIP | 22 | 253443 | 12 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $483 million. That figure was a meager $67 million in EQM’s case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand Braskem SA (ADR) (NYSE:BAK) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks EQT Midstream Partners LP (NYSE:EQM) is even less popular than BAK. 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.
