How Do Hedge Funds Feel About AmeriGas Partners, L.P. (APU)?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.

Is AmeriGas Partners, L.P. (NYSE:APU) a worthy investment today? The best stock pickers are becoming hopeful. The number of long hedge fund bets inched up by 1 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Burlington Stores Inc (NYSE:BURL), Booz Allen Hamilton Holding Corporation (NYSE:BAH), and Senior Housing Properties Trust (NYSE:SNH) to gather more data points.

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To most stock holders, hedge funds are perceived as slow, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open today. Our experts hone in on the bigwigs of this club, about 700 funds. Most estimates calculate that this group of people administer the majority of the hedge fund industry’s total capital, and by tailing their matchless investments, Insider Monkey has discovered various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Now, let’s take a peek at the key action regarding AmeriGas Partners, L.P. (NYSE:APU).

How have hedgies been trading AmeriGas Partners, L.P. (NYSE:APU)?

At the Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’ Renaissance Technologies has the most valuable position in AmeriGas Partners, L.P. (NYSE:APU), worth close to $9.4 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by PEAK6 Capital Management, managed by Matthew Hulsizer, which holds a $1.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish contain George Hall’s Clinton Group and Robert B. Gillam’s McKinley Capital Management.

Moreover, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in AmeriGas Partners, L.P. (NYSE:APU). Arrowstreet Capital had $1 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks similar to AmeriGas Partners, L.P. (NYSE:APU). These stocks are Burlington Stores Inc (NYSE:BURL), Booz Allen Hamilton Holding Corporation (NYSE:BAH), Senior Housing Properties Trust (NYSE:SNH), and Oceaneering International (NYSE:OII). This group of stocks’ market valuations resemble APU’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BURL 39 771880 1
BAH 15 152198 -8
SNH 14 53242 -3
OII 28 183011 1

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $290 million. That figure was just $15 million in APU’s case. Burlington Stores Inc (NYSE:BURL) is the most popular stock in this table, while Senior Housing Properties Trust (NYSE:SNH) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks AmeriGas Partners, L.P. (NYSE:APU) is even less popular than SNH. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.