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Should You Avoid Corenergy Infrastructure Trust Inc (CORR)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Corenergy Infrastructure Trust Inc (NYSE:CORR).

Is Corenergy Infrastructure Trust Inc (NYSE:CORR) an exceptional investment now? Money managers are becoming less confident. The number of long hedge fund bets were trimmed by 1 lately. Our calculations also showed that CORR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CORR was in 9 hedge funds’ portfolios at the end of March. There were 10 hedge funds in our database with CORR holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the new hedge fund action regarding Corenergy Infrastructure Trust Inc (NYSE:CORR).

How have hedgies been trading Corenergy Infrastructure Trust Inc (NYSE:CORR)?

At Q1’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in CORR a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Corenergy Infrastructure Trust Inc (NYSE:CORR), which was worth $18.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $2.8 million worth of shares. Winton Capital Management, Two Sigma Advisors, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Corenergy Infrastructure Trust Inc (NYSE:CORR), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to CORR.

Because Corenergy Infrastructure Trust Inc (NYSE:CORR) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that elected to cut their full holdings in the first quarter. It’s worth mentioning that Richard Driehaus’s Driehaus Capital cut the biggest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $0.7 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $0.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Corenergy Infrastructure Trust Inc (NYSE:CORR). These stocks are NVE Corporation (NASDAQ:NVEC), Lawson Products, Inc. (NASDAQ:LAWS), NexTier Oilfield Solutions Inc. (NYSE:NEX), and GenMark Diagnostics, Inc (NASDAQ:GNMK). This group of stocks’ market valuations are similar to CORR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NVEC 9 18225 -1
LAWS 7 15303 0
NEX 21 85243 -8
GNMK 14 43800 -3
Average 12.75 40643 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $25 million in CORR’s case. NexTier Oilfield Solutions Inc. (NYSE:NEX) is the most popular stock in this table. On the other hand Lawson Products, Inc. (NASDAQ:LAWS) is the least popular one with only 7 bullish hedge fund positions. Corenergy Infrastructure Trust Inc (NYSE:CORR) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately CORR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CORR investors were disappointed as the stock returned -37.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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