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.
Nabors Industries Ltd. (NYSE:NBR) has seen an increase in hedge fund sentiment lately, with 4 more hedge funds owning the stock on September 30 than did on June 30. 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 Avista Corp (NYSE:AVA), China Biologic Products Inc (NASDAQ:CBPO), and Molina Healthcare, Inc. (NYSE:MOH) to gather more data points.
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.
How are hedge funds trading Nabors Industries Ltd. (NYSE:NBR)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 15% from the previous quarter, returning hedge fund ownership to where it was on March 31. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Balyasny Asset Management, run by Dmitry Balyasny, holds the number one position in Nabors Industries Ltd. (NYSE:NBR). According to regulatory filings, the fund has a $90.8 million position in the stock. On Balyasny Asset Management’s heels is Citadel Investment Group, led by Ken Griffin, holding a $33 million position. Other members of the smart money with similar optimism consist of Steve Cohen’s Point72 Asset Management, Jim Simons’ Renaissance Technologies, and Kenneth Tropin’s Graham Capital Management.