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Horizon Global Corp (HZN): Are Hedge Funds Right About This Stock?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Horizon Global Corp (NYSE:HZN).

Horizon Global Corp (NYSE:HZN) was in 14 hedge funds’ portfolios at the end of the third quarter of 2015, as the company went public in June. 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 Civeo Corporation (Canada) (NYSE:CVEO), Stemline Therapeutics Inc (NASDAQ:STML), and Amira Nature Foods Ltd (NYSE:ANFI) to gather more data points.

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According to most stock holders, hedge funds are viewed as worthless, old investment vehicles of years past. While there are greater than an 8000 funds in operation at the moment, We hone in on the leaders of this club, around 700 funds. These money managers administer the lion’s share of the hedge fund industry’s total capital, and by following their unrivaled picks, Insider Monkey has discovered a few investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s review the fresh action regarding Horizon Global Corp (NYSE:HZN).

What have hedge funds been doing with Horizon Global Corp (NYSE:HZN)?

Of the funds tracked by Insider Monkey, Lee Munder Capital Group, managed by Lee Munder, holds the biggest position in Horizon Global Corp (NYSE:HZN). Lee Munder Capital Group has a $8.9 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Rutabaga Capital Management, managed by Peter Schliemann, which holds a $8.3 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Quincy Lee’s Ancient Art (Teton Capital), Brian Taylor’s Pine River Capital Management and Dan Friedberg’s Sagard Capital Partners Management Corp.

Let’s also examine hedge fund activity in other stocks similar to Horizon Global Corp (NYSE:HZN). These stocks are Civeo Corporation (Canada) (NYSE:CVEO), Stemline Therapeutics Inc (NASDAQ:STML), Amira Nature Foods Ltd (NYSE:ANFI), and Endeavour Silver Corp. (CAN) (NYSE:EXK). This group of stocks’ market values are closest to HZN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVEO 15 33940 -6
STML 8 20373 -3
ANFI 4 1442 -3
EXK 4 3643 -3

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $15 million, versus $45 million in HZN’s case. Civeo Corporation (Canada) (NYSE:CVEO) is the most popular stock in this table. On the other hand Amira Nature Foods Ltd (NYSE:ANFI) is the least popular one with only 4 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 slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CVEO might be a better candidate to consider a long position.

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