The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we analyze what the smart money thinks of Plains All American Pipeline, L.P. (NYSE:PAA) and find out how it is affected by hedge funds’ moves.
Is Plains All American Pipeline, L.P. (NYSE:PAA) the right pick for your portfolio? Hedge funds seem to be selling. The number of bullish hedge fund bets that are revealed through the 13F filings decreased by two last quarter. In this way, there were 17 hedge funds in our database with PAA positions at the end of September. At the end of this article we will also compare PAA to other stocks including Franco-Nevada Corporation (NYSE:FNV), Cincinnati Financial Corporation (NASDAQ:CINF), and Regions Financial Corporation (NYSE:RF) to get a better sense of its popularity.
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.
Now, let’s take a look at the latest action surrounding Plains All American Pipeline, L.P. (NYSE:PAA).
What does the smart money think about Plains All American Pipeline, L.P. (NYSE:PAA)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on Plains All American Pipeline, down by 11% over the quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in PAA at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Balyasny Asset Management, led by Dmitry Balyasny, holds the most valuable position in Plains All American Pipeline, L.P. (NYSE:PAA). Balyasny Asset Management has a $21.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund is Matthew Hulsizer’s PEAK6 Capital Management, which holds a $15.4 million call position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Michael Price’s MFP Investors, Millennium Management, one of the 10 largest hedge funds in the world, and Russell Hawkins’ Hawkins Capital. We should note that MFP Investors 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.