Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Fibria Celulose SA (ADR) (NYSE:FBR).
Fibria Celulose SA (ADR) (NYSE:FBR) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. FBR was in 7 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with FBR positions at the end of the previous quarter. At the end of this article we will also compare FBR to other stocks including Cypress Semiconductor Corporation (NASDAQ:CY), Transocean LTD (NYSE:RIG), and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) to get a better sense of its popularity.
Follow Fibria Celulose S A (NYSE:FBR)
Follow Fibria Celulose S A (NYSE:FBR)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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With all of this in mind, we’re going to take a gander at the new action regarding Fibria Celulose SA (ADR) (NYSE:FBR).
What have hedge funds been doing with Fibria Celulose SA (ADR) (NYSE:FBR)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FBR over the last 5 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world has the largest position in Fibria Celulose SA (ADR) (NYSE:FBR), worth close to $30.1 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander’s Millennium Management, which holds a $6.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Steve Cohen’s Point72 Asset Management, Alexander Mitchell’s Scopus Asset Management and Cliff Asness’s AQR 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-microcap stocks.
Since Fibria Celulose SA (ADR) (NYSE:FBR) has sustained bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds who sold off their full holdings by the end of the third quarter. At the top of the heap, Clint Carlson’s Carlson Capital said goodbye to the biggest investment of the 700 funds monitored by Insider Monkey, totaling an estimated $5.9 million in stock. Ernest Chow and Jonathan Howe’s fund, Sensato Capital Management, also dumped its stock, about $0.8 million worth.
Let’s also examine hedge fund activity in other stocks similar to Fibria Celulose SA (ADR) (NYSE:FBR). We will take a look at Cypress Semiconductor Corporation (NASDAQ:CY), Transocean LTD (NYSE:RIG), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Huntsman Corporation (NYSE:HUN). All of these stocks’ market caps resemble FBR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CY | 31 | 366691 | 6 |
| RIG | 35 | 457059 | 3 |
| TTWO | 46 | 1228866 | -1 |
| HUN | 42 | 563476 | 4 |
As you can see these stocks had an average of 38.5 hedge funds with bullish positions and the average amount invested in these stocks was $654 million. That figure was $40 million in FBR’s case. Take-Two Interactive Software, Inc. (NASDAQ:TTWO) is the most popular stock in this table. On the other hand Cypress Semiconductor Corporation (NASDAQ:CY) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Fibria Celulose SA (ADR) (NYSE:FBR) is even less popular than CY. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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