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 successful funds in these small-cap stocks. In the following paragraphs, we analyze Videocon d2h Ltd – ADR (NASDAQ:VDTH) from the perspective of those successful funds.
Videocon d2h Ltd – ADR (NASDAQ:VDTH) shareholders have witnessed a decrease in hedge fund interest recently. There were 14 hedge funds in our database with VDTH positions at the end of June, 3 more than there were at the end of September. 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 United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), VSE Corporation (NASDAQ:VSEC), and LeMaitre Vascular Inc (NASDAQ:LMAT) 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.
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How have hedgies been trading Videocon d2h Ltd – ADR (NASDAQ:VDTH)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a 21% drop from the second quarter of 2016. On the other hand, there were a total of 14 hedge funds with a bullish position in VDTH at the beginning of this year, same as at the end of June. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Luxor Capital Group, led by Christian Leone, holds the most valuable position in Videocon d2h Ltd – ADR (NASDAQ:VDTH). Luxor Capital Group has a $52.7 million position in the stock, comprising 1.5% of its 13F portfolio. The second largest stake is held by GMT Capital, led by Thomas E. Claugus, which holds a $17.1 million position. Remaining professional money managers that are bullish comprise Remy Trafelet’s Trafelet Capital, Noam Gottesman’s GLG Partners, and Matthew Halbower’s Pentwater Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that dropped their entire stakes in the stock during the third quarter. Interestingly, Ross Berman’s Green Owl Capital Management dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, valued at about $1.9 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.3 million worth of shares.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Videocon d2h Ltd – ADR (NASDAQ:VDTH) but similarly valued. These stocks are United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), VSE Corporation (NASDAQ:VSEC), LeMaitre Vascular Inc (NASDAQ:LMAT), and Culp, Inc. (NYSE:CFI). This group of stocks’ market caps resemble VDTH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UIHC | 15 | 30406 | 5 |
| VSEC | 3 | 4333 | 0 |
| LMAT | 11 | 28935 | 4 |
| CFI | 8 | 27763 | 0 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $100 million in VDTH’s case. United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC) is the most popular stock in this table. On the other hand VSE Corporation (NASDAQ:VSEC) is the least popular one with only 3 bullish hedge fund positions. Videocon d2h Ltd – ADR (NASDAQ:VDTH) 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 UIHC might be a better candidate to consider taking a long position in.
Disclosure: None
