Elite Hedge Fund Managers Just Made Noteworthy Moves On These 3 Stocks

Both small and large hedge fund vehicles have filed their latest 13Fs with the SEC, which means that individual investors can now pick potential winners by examining the filings and moves of successful hedge funds. However, the equity positions revealed in these quarterly filings are slightly outdated, as the deadline requirement for these reports is 45 days after the end of each quarter. Long-term oriented investors should not worry whether 13Fs are filed in a timely manner, as a one month-period bears no meaning for such investors. If one is considering mimicking famous hedge funds’ investments and moves, he or she can also monitor their 13G and 13D filings, which are filed within a more immediate time frame. For this reason, this article will discuss three 13G filings submitted recently with the SEC by several hedge funds monitored by our team.

Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 53 percentage points, returning 102% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.

Let’s kick off our discussion with a Schedule 13G filing submitted by Scopia Capital Management LP. As stated by the filing, the hedge fund, founded by Matt Sirovich and Jeremy Mindich, owns 2.20 million Neuroderm Ltd (NASDAQ:NDRM) shares, which denotes an increase of 857,377 shares from the position disclosed in the fund’s 13F filing for the September quarter. The 2.20 million-share position represents 10.22% of the pharmaceutical company’s outstanding common stock. This is definitely a stock for long-term investors, considering that the company is in the early stages of development of its drug candidates and has not unlocked any revenue streams thus far. Neuroderm Ltd (NASDAQ:NDRM), which focuses on developing drugs for central nervous system diseases, spent $3.7 million on research and development activities in the third quarter, compared to $1.3 million registered last year. This clearly shows that the company is working hard on developing its next-generation product candidates and move them towards commercialization.

The clinical-stage pharmaceutical company received more attention from the smart money investors observed by Insider Monkey during the third quarter, as the number of hedge funds with positions in the company doubled to 12 during the three-month period. These investors accumulated 28.90% of the company’s shares on September 30, while the value of their investments grew to $128.74 million from $25.52 million quarter-over-quarter. Peter Kolchinsky’s RA Capital Management acquired a 425,000-share position in Neuroderm Ltd (NASDAQ:NDRM) during the third quarter.

The second page of the article discusses the 13Gs filed by hedge funds BlueMountain Capital Management and Balyasny Asset Management.

Moving on to the next 13G filing, BlueMountain Capital Management, founded by Andrew Feldstein and Stephen Siderow, reported owning 7.86 million shares of TerraForm Power Inc. (NASDAQ:TERP), which make up 7.3% of the company’s shares. This compares with the 5.07 million-share position revealed by BlueMountain through its latest 13F filing. TerraForm Power, a yieldco subsidiary of Sunedison Inc. (NYSE:SUNE), has had a terrible year in terms of stock performance, with its shares declining by 73% year-to-date. TerraForm is a dividend growth-oriented company that owns and operates contracted renewable energy assets purchased from Sunedison and other parties, but the current market conditions for energy companies are seriously hindering the company’s financing options for its growth strategy. Let us remind you that yieldcos were originally created as means of attracting cheap financing for new renewable energy projects, but yieldcos’ disappointing stock performance has made this source of funding quite expensive.

Expectedly, TerraForm Power Inc. (NASDAQ:TERP) lost its charm within the hedge fund industry during the September quarter, with the number of smart money investors with positions in the yieldco decreasing to 31 from 46 quarter-over-quarter. These hedge fund investors accumulated 24.00% of the company’s outstanding shares on September 30, while the value of their positions dropped to $476.64 million from $1.09 billion. Christian Leone’s Luxor Capital Group holds 4.66 million shares of TerraForm Power Inc. (NASDAQ:TERP) as of the end of September.

Balyasny Asset Management, founded by Dmitry Balyasny, reported an ownership stake of 4.66 million shares or 5.07% in Swift Transportation Co (NYSE:SWFT) via a freshly-submitted 13G filing. This denotes an increase of 4.11 million shares from the position disclosed in the latest round of 13Fs. The multi-faceted transportation company has seen its shares plummet by 43% since the beginning of the year, thanks to the softer-than-expected freight environment. Just recently, the company reported third quarter earnings per share of $0.31 on revenue of $1.07 billion, slightly missing analysts’ estimates of EPS of $0.32 on revenue of $1.08 billion. Swift Transportation Co (NYSE:SWFT)’s revenue generated from the truckload segment came to $552.8 million, which was down from $570.9 million reported a year ago. Even so, the shares of the company are currently trading at an attractive trailing price-to-earnings ratio of 12.76, which compares with a mean of 22.70 for the companies included in the S&P 500 Index.

The hedge funds monitored by the Insider Monkey team found the stock more attractive during the third quarter, as the number of smart money investors with stakes in the struggling company climbed to 38 from 32. However, the value of these stakes declined to $268.38 million from $423.32 million during the three-month period. Ultimately, these hedge fund investors owned 12.50% of the company’s shares on September 30, with Steve Cohen’s Point72 Asset Management being one of the most bullish investors of Swift among them. The family office held a 2.57 million-share position in Swift Transportation Co (NYSE:SWFT) on September 30.

Disclosure: None