Here is What Hedge Funds Think About Ecopetrol S.A. (ADR) (EC)

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Is Ecopetrol S.A. (ADR) (NYSE:EC) the right investment to pursue these days? The best stock pickers are betting on the stock. The number of bullish hedge fund bets increased by 2 recently. 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 EZCORP Inc (NASDAQ:EZPW), Flexion Therapeutics Inc (NASDAQ:FLXN), and Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI) to gather more data points.

To most investors, hedge funds are perceived as slow, outdated investment vehicles of years past. While there are greater than 8000 funds in operation at present, our researchers hone in on the masters of this club, around 700 funds. These investment experts oversee bulk of the hedge fund industry’s total asset base, and by following their highest performing equity investments, Insider Monkey has determined numerous investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, we’re going to check out the new action encompassing Ecopetrol S.A. (ADR) (NYSE:EC).

What have hedge funds been doing with Ecopetrol S.A. (ADR) (NYSE:EC)?

At the end of Q3, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 50% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the most valuable position in Ecopetrol S.A. (ADR) (NYSE:EC). Renaissance Technologies has a $22.9 million position in the stock, comprising 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, which holds a $5.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D E Shaw, and Israel Englander’s Millennium Management.

As industrywide interest jumped, key money managers have jumped into Ecopetrol S.A. (ADR) (NYSE:EC) headfirst. D E Shaw initiated a $2.2 million position during the quarter. The only other fund with a new position in the stock is Millennium Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ecopetrol S.A. (ADR) (NYSE:EC) but similarly valued. These stocks are EZCORP Inc (NASDAQ:EZPW), Flexion Therapeutics Inc (NASDAQ:FLXN), Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI), and Lionbridge Technologies, Inc. (NASDAQ:LIOX). This group of stocks’ market caps matches Ecopetrol S.A. (ADR) (NYSE:EC)’s market cap.

As you can see, these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $36 million in Ecopetrol S.A. (ADR) (NYSE:EC)’s case. EZCORP Inc (NASDAQ:EZPW) is the most popular stock in this table. On the other hand, Western Asset High Yield Defined Opportunity Fund Inc. (NYSE:HYI) is the least popular one with only 4 bullish hedge fund positions. Ecopetrol S.A. (ADR) (NYSE:EC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, EZCORP Inc (NASDAQ:EZPW) might be a better candidate to consider a long position.