We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards PHH Corporation (NYSE:PHH), and what that likely means for the prospects of the company and its stock.
PHH Corporation (NYSE:PHH) investors should pay attention to an increase in activity from the world’s largest hedge funds. At the end of September, 20 funds tracked by Insider Monkey held shares of PHH, up by three funds over the quarter. At the end of this article we will also compare PHH to other stocks including Cardinal Financial Corporation (NASDAQ:CFNL), Flotek Industries Inc (NYSE:FTK), and National Western Life Insurance Company (NASDAQ:NWLI) to get a better sense of its popularity.
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.
Keeping this in mind, let’s analyze the fresh action surrounding PHH Corporation (NYSE:PHH).
What have hedge funds been doing with PHH Corporation (NYSE:PHH)?
As mentioned earlier, heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, which represents an increase of 18% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in PHH heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Larry Robbins’ Glenview Capital has the largest position in PHH Corporation (NYSE:PHH), worth close to $68.2 million, comprising 0.5% of its total 13F portfolio. On Glenview Capital’s heels is Silver Point Capital, led by Edward A. Mule, which holds a $63.7 million position; the fund has 9.5% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Gunnar Overstrom’s Three Corner Global Investors and Jim Simons’ Renaissance Technologies. 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.