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Investors Not Convinced That It’s Time To Buy Dominion Midstream Partners LP (DM)

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Is Dominion Midstream Partners LP (NYSE:DM) ready to rally soon? The smart money is growing slightly more bullish. The number of long hedge fund bets advanced 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 Masonite International Corp (NYSE:DOOR), Copa Holdings, S.A. (NYSE:CPA), and Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) to gather more data points.

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At the moment there are tons of methods investors employ to evaluate stocks. Two of the best methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass the broader indices by a significant margin (see the details here).

Now, let’s view the fresh action surrounding TheDominion Midstream Partners LP (NYSE:DM).

What does the smart money think about Dominion Midstream Partners LP (NYSE:DM)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 20% jump from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings considerably (or had already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Dmitry Balyasny’s Balyasny Asset Management has the most valuable position in Dominion Midstream Partners LP (NYSE:DM), worth close to $7.5 million, corresponding to 0.1% of its total 13F portfolio. The second-largest stake is held by Green Arrow Capital Management, led by Millennium Management Subsidiary, holding a $2.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism encompass Stuart J. Zimmer’s Zimmer Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ken Griffin’s Citadel Investment Group.

Now, key hedge funds have jumped into Dominion Midstream Partners LP (NYSE:DM) headfirst. Marshall Wace LLP assembled the most valuable position in Dominion Midstream Partners LP (NYSE:DM). Marshall Wace LLP had $0.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.1 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Dominion Midstream Partners LP (NYSE:DM). These stocks are Masonite International Corp (NYSE:DOOR), Copa Holdings, S.A. (NYSE:CPA), Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), and Ambarella Inc (NASDAQ:AMBA). This group of stocks’ market valuations are closest to Dominion Midstream Partners LP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DOOR 28 553480 1
CPA 14 164856 -4
CLMT 8 22180 0
AMBA 27 324322 1

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was just $13 million in Dominion Midstream Partners LP’s case. Masonite International Corp (NYSE:DOOR) is the most popular stock in this table. On the other hand Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Dominion Midstream Partners LP (NYSE:DM) is even less popular than Calumet. 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.

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