Is Black Stone Minerals LP (BSM) A Good Stock To Buy?

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Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Black Stone Minerals LP (NYSE:BSM) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 7 hedge funds’ portfolios at the end of September. At the end of this article we will also compare BSM to other stocks including Sensient Technologies Corporation (NYSE:SXT), Olin Corporation (NYSE:OLN), and Cameco Corporation (USA) (NYSE:CCJ) to get a better sense of its popularity.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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How have hedgies been trading Black Stone Minerals LP (NYSE:BSM)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. On the other hand, there were a total of 4 hedge funds with a bullish position in BSM at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

BSM Chart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Hawkins Capital, led by Russell Hawkins, holds the largest position in Black Stone Minerals LP (NYSE:BSM). Hawkins Capital has a $9.2 million position in the stock, comprising 3% of its 13F portfolio. The second most bullish fund is Renaissance Technologies, one of the largest hedge funds in the world, holding a $5.8 million position. Remaining professional money managers that hold long positions consist of Russell Lucas’ Lucas Capital Management, Carson Yost’s Yost Capital Management and Drew Cupps’ Cupps Capital Management. We should note that Yost Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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