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Is Brookfield Infrastructure Partners L.P. (BIP) A Good Stock To Buy?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Brookfield Infrastructure Partners L.P. (NYSE:BIP).

Brookfield Infrastructure Partners L.P. (NYSE:BIP) shareholders have witnessed an increase in support from the world’s most elite money managers recently. At the end of this article we will also compare BIP to other stocks including Axalta Coating Systems Ltd (NYSE:AXTA), YPF SA (ADR) (NYSE:YPF), and STMicroelectronics N.V. (ADR) (NYSE:STM) to get a better sense of its popularity.

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Now, let’s take a glance at the new action encompassing Brookfield Infrastructure Partners L.P. (NYSE:BIP).

How are hedge funds trading Brookfield Infrastructure Partners L.P. (NYSE:BIP)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the biggest position in Brookfield Infrastructure Partners L.P. (NYSE:BIP), worth close to $6.8 million, accounting for less than 0.1% of its total 13F portfolio. Coming in second is Brave Warrior Capital, led by Glenn Greenberg, holding a $4.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Murray Stahl’s Horizon Asset Management, Christopher C. Grisanti’s Grisanti Brown & Partners and George Hall’s Clinton Group.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Brave Warrior Capital, managed by Glenn Greenberg, established the largest position in Brookfield Infrastructure Partners L.P. (NYSE:BIP). Brave Warrior Capital had $4.5 million invested in the company at the end of the quarter. George Hall’s Clinton Group also made a $2 million investment in the stock during the quarter. The other funds with brand new BIP positions are John Overdeck and David Siegel’s Two Sigma Advisors and Israel Englander’s Millennium Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Brookfield Infrastructure Partners L.P. (NYSE:BIP) but similarly valued. These stocks are Axalta Coating Systems Ltd (NYSE:AXTA), YPF SA (ADR) (NYSE:YPF), STMicroelectronics N.V. (ADR) (NYSE:STM), and United Therapeutics Corporation (NASDAQ:UTHR). This group of stocks’ market valuations are similar to BIP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXTA 44 1786793 6
YPF 32 634457 -2
STM 6 6900 1
UTHR 34 1584972 -7

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1,003 million. That figure was $26 million in BIP’s case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand STMicroelectronics N.V. (ADR) (NYSE:STM) is the least popular one with only 6 bullish hedge fund positions. Brookfield Infrastructure Partners L.P. (NYSE:BIP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AXTA might be a better candidate to consider a long position.

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