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Hedge Funds Aren’t Crazy About Usa Compression Partners LP (USAC) Anymore

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Usa Compression Partners LP (NYSE:USAC) based on that data.

Is Usa Compression Partners LP (NYSE:USAC) ready to rally soon? Prominent investors are selling. The number of bullish hedge fund positions dropped by 3 in recent months. Our calculations also showed that USAC 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.

At the moment there are numerous tools market participants can use to value stocks. Some of the most useful tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top fund managers can outpace the S&P 500 by a healthy margin (see the details here).

Richard Driehaus of Driehaus 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 take a look at the key hedge fund action regarding Usa Compression Partners LP (NYSE:USAC).

How are hedge funds trading Usa Compression Partners LP (NYSE:USAC)?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in USAC over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in Usa Compression Partners LP (NYSE:USAC). Arrowstreet Capital has a $4.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Intrinsic Edge Capital, led by Mark Coe, holding a $1.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, Richard Driehaus’s Driehaus Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Usa Compression Partners LP (NYSE:USAC), around 0.17% 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 USAC.

Due to the fact that Usa Compression Partners LP (NYSE:USAC) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds that slashed their positions entirely heading into Q4. It’s worth mentioning that Russell Lucas’s Lucas Capital Management said goodbye to the largest position of all the hedgies tracked by Insider Monkey, worth an estimated $0.5 million in stock, and Renaissance Technologies was right behind this move, as the fund dumped about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Usa Compression Partners LP (NYSE:USAC). We will take a look at Lakeland Bancorp, Inc. (NASDAQ:LBAI), Arbor Realty Trust, Inc. (NYSE:ABR), LendingClub Corp (NYSE:LC), and Seacor Holdings, Inc. (NYSE:CKH). This group of stocks’ market caps match USAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LBAI 10 21066 0
ABR 14 37504 -7
LC 7 2595 -1
CKH 9 77355 -7
Average 10 34630 -3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $8 million in USAC’s case. Arbor Realty Trust, Inc. (NYSE:ABR) is the most popular stock in this table. On the other hand LendingClub Corp (NYSE:LC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Usa Compression Partners LP (NYSE:USAC) is even less popular than LC. 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 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 USAC as the stock returned 126.3% 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.