A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Exterran Corporation (NYSE:EXTN).
Exterran Corporation (NYSE:EXTN) was in 15 hedge funds’ portfolios at the end of the fourth quarter of 2018. EXTN has seen a decrease in enthusiasm from smart money lately. There were 19 hedge funds in our database with EXTN positions at the end of the previous quarter. Our calculations also showed that EXTN isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a peek at the latest hedge fund action encompassing Exterran Corporation (NYSE:EXTN).
What does the smart money think about Exterran Corporation (NYSE:EXTN)?
At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EXTN over the last 14 quarters. So, let’s see 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, Magnetar Capital, managed by Alec Litowitz and Ross Laser, holds the number one position in Exterran Corporation (NYSE:EXTN). Magnetar Capital has a $37.3 million position in the stock, comprising 0.9% of its 13F portfolio. The second most bullish fund manager is Cannell Capital, managed by J. Carlo Cannell, which holds a $14.5 million position; 4% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions include Todd J. Kantor’s Encompass Capital Advisors, D. E. Shaw’s D E Shaw and Jim Simons’s Renaissance Technologies.
Due to the fact that Exterran Corporation (NYSE:EXTN) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who were dropping their positions entirely in the third quarter. Interestingly, Clint Carlson’s Carlson Capital said goodbye to the largest position of the “upper crust” of funds followed by Insider Monkey, worth an estimated $5.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dropped about $5.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Exterran Corporation (NYSE:EXTN) but similarly valued. These stocks are Fang Holdings Limited (NYSE:SFUN), Tucows Inc. (NASDAQ:TCX), Quad/Graphics, Inc. (NYSE:QUAD), and SurModics, Inc. (NASDAQ:SRDX). All of these stocks’ market caps match EXTN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $82 million in EXTN’s case. Quad/Graphics, Inc. (NYSE:QUAD) is the most popular stock in this table. On the other hand Tucows Inc. (NASDAQ:TCX) is the least popular one with only 7 bullish hedge fund positions. Exterran Corporation (NYSE:EXTN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately EXTN wasn’t nearly as popular as these 15 stock and hedge funds that were betting on EXTN were disappointed as the stock returned -3.4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.