Hedge Funds Think The Sky’s The Limit For Horizon Global Corp (HZN)

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Horizon Global Corp (NYSE:HZN) from the perspective of those elite funds.

Horizon Global Corp (NYSE:HZN) investors should be aware of an increase in hedge fund interest lately, as a net total of 6 hedge funds added the stock to their portfolios in Q3. 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 Farmers Capital Bank Corp (NASDAQ:FFKT), MCBC Holdings Inc (NASDAQ:MCFT), and Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) 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 are hedge funds trading Horizon Global Corp (NYSE:HZN)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 46% surge from the previous quarter, pushing the stock to its highest levels of hedge fund ownership in the last year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Spitfire Capital, managed by Julian Allen, holds the most valuable position in Horizon Global Corp (NYSE:HZN). Spitfire Capital has a $15 million position in the stock, comprising 6.7% of its 13F portfolio. On Spitfire Capital’s heels is BP Capital, managed by T Boone Pickens, which holds a $10.1 million position; the fund has 3.6% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Peter Schliemann’s Rutabaga Capital Management, Jim Simons’ Renaissance Technologies and Richard Driehaus’ Driehaus Capital.

As aggregate interest increased, specific money managers have been driving this bullishness. Driehaus Capital created the most valuable position in Horizon Global Corp (NYSE:HZN). Driehaus Capital had $5.2 million invested in the company at the end of the quarter. Ira Unschuld’s Brant Point Investment Management also made a $2.8 million investment in the stock during the quarter. The following funds were also among the new HZN investors: Matthew Hulsizer’s PEAK6 Capital Management, Mike Vranos’ Ellington, and Neil Chriss’ Hutchin Hill Capital.

Let’s check out hedge fund activity in other stocks similar to Horizon Global Corp (NYSE:HZN). These stocks are Farmers Capital Bank Corp (NASDAQ:FFKT), MCBC Holdings Inc (NASDAQ:MCFT), Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), and Zix Corporation (NASDAQ:ZIXI). This group of stocks’ market valuations are closest to HZN’s market valuation.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $73 million in HZN’s case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Farmers Capital Bank Corp (NASDAQ:FFKT) is the least popular one with only 3 bullish hedge fund positions. Horizon Global Corp (NYSE:HZN) is not the most popular stock in this group but hedge fund interest is still above average. This is a positive signal, as we’d rather spend our time researching stocks that hedge funds are piling on lately. In this regard HZN might be a better candidate than the other stocks to consider taking up a long position in.

Disclosure: None