Should I Buy Green Plains Partners LP (GPP)?

Is Green Plains Partners LP (NASDAQ:GPP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Green Plains Partners LP (NASDAQ:GPP) has seen an increase in support from the world’s most elite money managers of late. Green Plains Partners LP (NASDAQ:GPP) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. There were 3 hedge funds in our database with GPP positions at the end of the fourth quarter. Our calculations also showed that GPP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Green Plains Partners LP (NASDAQ:GPP).

Do Hedge Funds Think GPP Is A Good Stock To Buy Now?

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 2 hedge funds with a bullish position in GPP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, No Street Capital, managed by Jeff Osher, holds the number one position in Green Plains Partners LP (NASDAQ:GPP). No Street Capital has a $25.2 million position in the stock, comprising 3.3% of its 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions comprise Ken Griffin’s Citadel Investment Group, Ken Griffin’s Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position No Street Capital allocated the biggest weight to Green Plains Partners LP (NASDAQ:GPP), around 3.25% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, setting aside 0.001 percent of its 13F equity portfolio to GPP.

Now, key hedge funds have jumped into Green Plains Partners LP (NASDAQ:GPP) headfirst. Citadel Investment Group, managed by Ken Griffin, established the largest call position in Green Plains Partners LP (NASDAQ:GPP). Citadel Investment Group had $0.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Green Plains Partners LP (NASDAQ:GPP) but similarly valued. We will take a look at Kezar Life Sciences, Inc. (NASDAQ:KZR), Smith Micro Software, Inc. (NASDAQ:SMSI), Sol-Gel Technologies Ltd. (NASDAQ:SLGL), Maiden Holdings, Ltd. (NASDAQ:MHLD), FS Bancorp, Inc. (NASDAQ:FSBW), Sterling Bancorp, Inc. (Southfield, MI) (NASDAQ:SBT), and Saratoga Investment Corp (NYSE:SAR). This group of stocks’ market valuations are similar to GPP’s market valuation.

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As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $26 million in GPP’s case. Smith Micro Software, Inc. (NASDAQ:SMSI) is the most popular stock in this table. On the other hand Sol-Gel Technologies Ltd. (NASDAQ:SLGL) is the least popular one with only 1 bullish hedge fund positions. Green Plains Partners LP (NASDAQ:GPP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GPP is 34.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately GPP wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GPP investors were disappointed as the stock returned 3.9% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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