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Hedge Funds Have Never Been Less Bullish On Cheniere Energy Partners LP (CQP)

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. In this article we are going to take a look at smart money sentiment towards Cheniere Energy Partners LP (NYSE:CQP).

Cheniere Energy Partners LP (NYSE:CQP) investors should pay attention to a decrease in hedge fund interest recently. Our calculations also showed that CQP 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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. With all of this in mind we’re going to take a look at the latest hedge fund action encompassing Cheniere Energy Partners LP (NYSE:CQP).

What does smart money think about Cheniere Energy Partners LP (NYSE:CQP)?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -57% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CQP 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.

Among these funds, Southport Management held the most valuable stake in Cheniere Energy Partners LP (NYSE:CQP), which was worth $810.3 million at the end of the third quarter. On the second spot was Columbus Hill Capital Management which amassed $4.1 million worth of shares. Citadel Investment Group was 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 Southport Management allocated the biggest weight to Cheniere Energy Partners LP (NYSE:CQP), around 9.03% of its 13F portfolio. Columbus Hill Capital Management is also relatively very bullish on the stock, earmarking 0.78 percent of its 13F equity portfolio to CQP.

Because Cheniere Energy Partners LP (NYSE:CQP) has faced declining sentiment from hedge fund managers, we can see that there exists a select few funds that slashed their entire stakes in the third quarter. Intriguingly, Zilvinas Mecelis’s Covalis Capital sold off the largest investment of the 750 funds monitored by Insider Monkey, valued at about $8.2 million in stock, and T Boone Pickens’s BP Capital was right behind this move, as the fund said goodbye to about $1.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 4 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Cheniere Energy Partners LP (NYSE:CQP). These stocks are iQIYI, Inc. (NASDAQ:IQ), Amcor plc (NYSE:AMCR), Leidos Holdings Inc (NYSE:LDOS), and Nomura Holdings, Inc. (NYSE:NMR). This group of stocks’ market values resemble CQP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IQ 28 983179 10
AMCR 19 208401 9
LDOS 30 571063 3
NMR 5 18048 0
Average 20.5 445173 5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $445 million. That figure was $815 million in CQP’s case. Leidos Holdings Inc (NYSE:LDOS) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Cheniere Energy Partners LP (NYSE:CQP) is even less popular than NMR. Hedge funds clearly dropped the ball on CQP 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on CQP as the stock returned 23.4% so far in the second quarter and outperformed the market by an even larger margin.

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