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Hoegh LNG Partners LP (HMLP): Hedge Funds Cautiously Watching

In this article you are going to find out whether hedge funds think Hoegh LNG Partners LP (NYSE:HMLP) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Hoegh LNG Partners LP (NYSE:HMLP) a buy, sell, or hold? Prominent investors are betting on the stock. The number of bullish hedge fund positions inched up by 1 lately. Our calculations also showed that HMLP 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 metrics investors employ to appraise publicly traded companies. A couple of the less known metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite fund managers can outperform the market by a superb amount (see the details here).

Joe Huber - Huber Capital Management

Joe Huber of Huber Capital Management

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 we’re going to take a look at the fresh hedge fund action regarding Hoegh LNG Partners LP (NYSE:HMLP).

How are hedge funds trading Hoegh LNG Partners LP (NYSE:HMLP)?

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in HMLP a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is HMLP A Good Stock To Buy?

According to Insider Monkey’s hedge fund database,  Renaissance Technologies has the biggest position in Hoegh LNG Partners LP (NYSE:HMLP), worth close to $7.3 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Huber Capital Management, managed by Joe Huber, which holds a $3.5 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Phil Frohlich’s Prescott Group Capital Management. In terms of the portfolio weights assigned to each position Huber Capital Management allocated the biggest weight to Hoegh LNG Partners LP (NYSE:HMLP), around 0.64% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, setting aside 0.35 percent of its 13F equity portfolio to HMLP.

As one would reasonably expect, specific money managers have been driving this bullishness. Engineers Gate Manager, managed by Greg Eisner, established the most outsized position in Hoegh LNG Partners LP (NYSE:HMLP). Engineers Gate Manager had $0.1 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hoegh LNG Partners LP (NYSE:HMLP) but similarly valued. These stocks are Preformed Line Products Company (NASDAQ:PLPC), Retail Value Inc. (NYSE:RVI), Macatawa Bank Corporation (NASDAQ:MCBC), and Solaris Oilfield Infrastructure, Inc. (NYSE:SOI). All of these stocks’ market caps are similar to HMLP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLPC 7 22936 0
RVI 13 72113 -3
MCBC 10 19243 2
SOI 11 29159 -1
Average 10.25 35863 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $16 million in HMLP’s case. Retail Value Inc. (NYSE:RVI) is the most popular stock in this table. On the other hand Preformed Line Products Company (NASDAQ:PLPC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Hoegh LNG Partners LP (NYSE:HMLP) is even less popular than PLPC. Hedge funds clearly dropped the ball on HMLP 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on HMLP as the stock returned 54.5% 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.