FPA Capital Fund recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 1.26% for the quarter, underperforming its benchmark, the Russell 2500 Index which returned 5.88% in the same quarter. You should check out FPA Capital Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, FPA Capital Fund highlighted a few stocks and Viper Energy Partners LP (NASDAQ:VNOM) is one of them. Viper Energy Partners LP (NASDAQ:VNOM) engages in the acquisition of oil and natural gas properties. In the last one year, Viper Energy Partners LP (NASDAQ:VNOM) stock lost 50.4% and on January 6th it had a closing price of $13.06. Here is what FPA Capital Fund said:
“VNOM was the Fund’s worst individual performer for the quarter. The company owns mineral rights to oil fields (we discussed the company in greater detail in prior commentaries). Interestingly, both spot and long term oil contracts did not change much from June 30th to September 30th. VNOM’s largest oil field operator, Diamondback Energy (Ticker: FANG), owns a large stake in the company. The relationship incentivizes FANG to develop acreage where mineral rights are owned by VNOM as it receives a higher percentage of the profits due to its ownership in VNOM. The stock declined during the quarter as: 1) FANG was having its own issues with high leverage; 2) VNOM hedged its 2020 production at low levels; and 3) VNOM has signaled a more gradual approach to returning to normalized levels of shareholder distributions, which have been cut due to the pandemic. We believe all of these are transitory factors and the selloff is overdone.”
In Q1 2020, the number of bullish hedge fund positions on Viper Energy Partners LP (NASDAQ:VNOM) stock decreased by about 31% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in VNOM’s growth potential. Our calculations showed that Viper Energy Partners LP (NASDAQ:VNOM) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.