Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Pacific Ethanol Inc (NASDAQ:PEIX) the right pick for your portfolio? Hedge funds are turning less bullish. The number of long hedge fund positions retreated by 5 lately. 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 KemPharm Inc (NASDAQ:KMPH), NeoPhotonics Corp (NYSE:NPTN), and Oppenheimer Holdings Inc. (USA) (NYSE:OPY) to gather more data points.
To most shareholders, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are over an 8000 funds with their doors open at present, Our researchers choose to focus on the upper echelon of this club, approximately 700 funds. These hedge fund managers shepherd the majority of the hedge fund industry’s total asset base, and by watching their inimitable stock picks, Insider Monkey has formulated various investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, let’s take a peek at the recent action surrounding Pacific Ethanol Inc (NASDAQ:PEIX).
Hedge fund activity in Pacific Ethanol Inc (NASDAQ:PEIX)
At the Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -28% from the previous quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Vertex One Asset Management, managed by John Thiessen, holds the largest position in Pacific Ethanol Inc (NASDAQ:PEIX). Vertex One Asset Management has a $7.4 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism comprise Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ken Griffin’s Citadel Investment Group.