What Does Hedge Fund Sentiment Say About Viper Energy Partners LP (VNOM)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Harvard Management Co. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was PEAK6 Capital Management).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Viper Energy Partners LP (NASDAQ:VNOM) but similarly valued. We will take a look at S & T Bancorp Inc (NASDAQ:STBA), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), Cubic Corporation (NYSE:CUB), and Adeptus Health Inc (NYSE:ADPT). All of these stocks’ market caps match VNOM’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $21 million in VNOM’s case. Adeptus Health Inc (NYSE:ADPT) is the most popular stock in this table, while S & T Bancorp Inc (NASDAQ:STBA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Viper Energy Partners LP (NASDAQ:VNOM) is even less popular than STBA. Considering that hedge funds aren’t fond of this stock in relation to other companies mentioned in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.