Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in MPLX LP (NYSE:MPLX)? The smart money sentiment can provide an answer to this question.
Is MPLX a good stock to buy now? MPLX LP (NYSE:MPLX) investors should be aware of an increase in hedge fund sentiment in recent months. MPLX LP (NYSE:MPLX) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that MPLX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to review the key hedge fund action encompassing MPLX LP (NYSE:MPLX).
Do Hedge Funds Think MPLX Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in MPLX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the biggest position in MPLX LP (NYSE:MPLX). Zimmer Partners has a $47.9 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Moore Global Investments, managed by Louis Bacon, which holds a $18.3 million position; 0.3% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of James Dondero’s Highland Capital Management, Henry Breck’s Heronetta Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Heronetta Management allocated the biggest weight to MPLX LP (NYSE:MPLX), around 5.99% of its 13F portfolio. Highland Capital Management is also relatively very bullish on the stock, setting aside 1.37 percent of its 13F equity portfolio to MPLX.
Now, some big names have jumped into MPLX LP (NYSE:MPLX) headfirst. Lonestar Capital Management, managed by Jerome L. Simon, initiated the most valuable position in MPLX LP (NYSE:MPLX). Lonestar Capital Management had $2.4 million invested in the company at the end of the quarter. Charles Davidson and Joseph Jacobs’s Wexford Capital also made a $0.7 million investment in the stock during the quarter. The other funds with brand new MPLX positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and David Andre and Astro Teller’s Cerebellum Capital.
Let’s go over hedge fund activity in other stocks similar to MPLX LP (NYSE:MPLX). These stocks are StoneCo Ltd. (NASDAQ:STNE), Trip.com Group Limited (NASDAQ:TCOM), Northern Trust Corporation (NASDAQ:NTRS), Cheniere Energy Partners LP (NYSE:CQP), TransUnion (NYSE:TRU), International Paper Company (NYSE:IP), and Teleflex Incorporated (NYSE:TFX). This group of stocks’ market values match MPLX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $963 million. That figure was $91 million in MPLX’s case. TransUnion (NYSE:TRU) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. MPLX LP (NYSE:MPLX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MPLX is 38.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on MPLX as the stock returned 51.9% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.