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Here’s What Hedge Funds Think About CNX Midstream Partners LP (CNXM)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like CNX Midstream Partners LP (NYSE:CNXM).

CNX Midstream Partners LP (NYSE:CNXM) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. CNXM was in 5 hedge funds’ portfolios at the end of the second quarter of 2019. There were 7 hedge funds in our database with CNXM positions at the end of the previous quarter. Our calculations also showed that CNXM 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.

Today there are a lot of formulas market participants have at their disposal to value publicly traded companies. Two of the less known formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top money managers can outperform their index-focused peers by a healthy amount (see the details here).

T Boone Pickens

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 take a glance at the recent hedge fund action encompassing CNX Midstream Partners LP (NYSE:CNXM).

What does smart money think about CNX Midstream Partners LP (NYSE:CNXM)?

Heading into the third quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in CNXM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CNXM_oct2019

Among these funds, Arrowstreet Capital held the most valuable stake in CNX Midstream Partners LP (NYSE:CNXM), which was worth $7.5 million at the end of the second quarter. On the second spot was BP Capital which amassed $3 million worth of shares. Moreover, Citadel Investment Group, EJF Capital, and Citadel Investment Group were also bullish on CNX Midstream Partners LP (NYSE:CNXM), allocating a large percentage of their portfolios to this stock.

Due to the fact that CNX Midstream Partners LP (NYSE:CNXM) has faced declining sentiment from the smart money, it’s easy to see that there is a sect of hedgies who were dropping their entire stakes by the end of the second quarter. Intriguingly, Renaissance Technologies dropped the largest position of the 750 funds monitored by Insider Monkey, comprising an estimated $2.2 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dumped its stock, about $1.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the second quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CNX Midstream Partners LP (NYSE:CNXM) but similarly valued. These stocks are Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), ZIOPHARM Oncology Inc. (NASDAQ:ZIOP), Tufin Software Technologies Ltd. (NYSE:TUFN), and Hyster-Yale Materials Handling Inc (NYSE:HY). This group of stocks’ market values are similar to CNXM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DCPH 15 234197 -2
ZIOP 12 141596 6
TUFN 6 34868 6
HY 12 35777 1
Average 11.25 111610 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $12 million in CNXM’s case. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is the most popular stock in this table. On the other hand Tufin Software Technologies Ltd. (NYSE:TUFN) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks CNX Midstream Partners LP (NYSE:CNXM) is even less popular than TUFN. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CNXM, though not to the same extent, as the stock returned 2.9% during the third quarter and outperformed the market as well.

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

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