Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Casella Waste Systems Inc. (NASDAQ:CWST) .
Casella Waste Systems Inc. (NASDAQ:CWST) was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. CWST investors should pay attention to an increase in hedge fund interest of late. There were 15 hedge funds in our database with CWST holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NMI Holdings Inc (NASDAQ:NMIH), DICE HOLDINGS, INC. (NYSE:DHX), and Flexion Therapeutics Inc (NASDAQ:FLXN) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How have hedgies been trading Casella Waste Systems Inc. (NASDAQ:CWST)?
Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 20% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in CWST heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, George McCabe’s Portolan Capital Management has the most valuable position in Casella Waste Systems Inc. (NASDAQ:CWST), worth close to $38.8 million, comprising 5.3% of its total 13F portfolio. The second most bullish fund manager is Skylands Capital, led by Charles Paquelet, which holds a $17.5 million position; 2.7% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions encompass Jim Simons’ Renaissance Technologies, Peter Schliemann’s Rutabaga Capital Management and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.