Is Altus Midstream Company (ALTM) Going to Burn These Hedge Funds?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Altus Midstream Company (NASDAQ:ALTM).

Altus Midstream Company (NASDAQ:ALTM) has seen an increase in hedge fund interest of late. ALTM was in 7 hedge funds’ portfolios at the end of the second quarter of 2019. There were 6 hedge funds in our database with ALTM holdings at the end of the previous quarter. Our calculations also showed that ALTM isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Kevin Michael Ulrich Anchorage Advisors

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the key hedge fund action encompassing Altus Midstream Company (NASDAQ:ALTM).

How have hedgies been trading Altus Midstream Company (NASDAQ:ALTM)?

Heading into the third quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in ALTM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with ALTM Positions

Among these funds, Anchorage Advisors held the most valuable stake in Altus Midstream Company (NASDAQ:ALTM), which was worth $9.1 million at the end of the second quarter. On the second spot was Point72 Asset Management which amassed $4.8 million worth of shares. Moreover, Magnetar Capital, Citadel Investment Group, and Millennium Management were also bullish on Altus Midstream Company (NASDAQ:ALTM), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Altus Midstream Company (NASDAQ:ALTM). Point72 Asset Management had $4.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.5 million position during the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Altus Midstream Company (NASDAQ:ALTM) but similarly valued. These stocks are PRA Group, Inc. (NASDAQ:PRAA), Frank’s International NV (NYSE:FI), Esperion Therapeutics, Inc. (NASDAQ:ESPR), and Getty Realty Corp. (NYSE:GTY). This group of stocks’ market values are similar to ALTM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRAA 8 27127 -3
FI 15 26617 3
ESPR 16 253729 2
GTY 10 92686 1
Average 12.25 100040 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $21 million in ALTM’s case. Esperion Therapeutics, Inc (NASDAQ:ESPR) is the most popular stock in this table. On the other hand PRA Group, Inc. (NASDAQ:PRAA) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Altus Midstream Company (NASDAQ:ALTM) is even less popular than PRAA. Hedge funds dodged a bullet by taking a bearish stance towards ALTM. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ALTM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ALTM investors were disappointed as the stock returned -23.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.