Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. That’s why we pay special attention to hedge fund activity in these stocks.
Beacon Roofing Supply, Inc. (NASDAQ:BECN) has seen an increase in hedge fund interest recently.
According to most shareholders, hedge funds are perceived as underperforming, old investment vehicles of the past. While there are over 8000 funds in operation at the moment, Experts at Insider Monkey, a website specializing in hedge funds, look at the upper echelon of this group, approximately 700 funds. These investment experts manage the lion’s share of the smart money’s total asset base, and by paying attention to their highest performing stock picks, Insider Monkey has spotted various investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Now, let’s check out the key action regarding Beacon Roofing Supply, Inc. (NASDAQ:BECN).
What have hedge funds been doing with Beacon Roofing Supply, Inc. (NASDAQ:BECN)?
Heading into Q4, a total of 22 of the hedge funds tracked by Insider Monkey were long on this stock, a change of 16% from the second quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.
According to hedge fund experts at Insider Monkey, Mariko Gordon’s Daruma Asset Management had the most valuable position in Beacon Roofing Supply, Inc. (NASDAQ:BECN), worth close to $57,4 million, corresponding to 3,5% of its total 13F portfolio. The second most bullish hedge fund manager is Fisher Asset Management, led by Ken Fisher, holding a $55,6 million position; 0,1% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish consist of Ken Griffin’s Citadel Investment Group, Matthew Lindenbaum’s Basswood Capital and Ken Grossman and Glen Schneider’s SG Capital Management.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Brant Point Investment Management, managed by Ira Unschuld, created the biggest position in Beacon Roofing Supply, Inc. (NASDAQ:BECN). Brant Point Investment Management had $7,3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $4 million investment in the stock during the quarter. The other funds with brand new BECN positions are Terence Hogan’s Addison Clark Management, Peter Muller’s PDT Partners, and Jim Simons’s Renaissance Technologies.
Let’s also take a look at hedge fund activity in other stocks similar to Beacon Roofing Supply, Inc. (NASDAQ:BECN). These stocks are Travelport Worldwide Ltd (NYSE:TVPT), Wageworks Inc (NYSE:WAGE), Astoria Financial Corp (NYSE:AF), and Gentherm Inc (NASDAQ:THRM). This group of stocks’ market caps match BECN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 18 hedge funds with long positions and the average amount invested in these stocks was $260 million. Beacon Roofing stands out in comparison with this most of these stocks, as more funds held shares of the company at the end of September. This suggest that Beacon may represent a better investment, but a further analysis is required before making a decision.