Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Stifel Financial Corp. (NYSE:SF) was in 19 hedge funds’ portfolios at the end of September. Stifel Financial Corp. (NYSE:SF) has seen an increase in hedge fund interest recently. There were 16 hedge funds in our database with Stifel Financial Corp. (NYSE:SF) holdings at the end of the previous quarter. 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 Seadrill Ltd (NYSE:SDRL), Waddell & Reed Financial, Inc. (NYSE:WDR), and SunPower Corporation (NASDAQ:SPWR) to gather more data points.
In the eyes of most stock holders, hedge funds are assumed to be worthless, old financial tools of the past. While there are over 8000 funds with their doors open today, Experts at Insider Monkey, a website specializing in hedge funds, hone in on the leaders of this group, around 700 funds. These money managers manage most of all hedge funds’ total capital, and by keeping an eye on their unrivaled investments, Insider Monkey has revealed many investment strategies that have historically outpaced Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s take a peek at the recent action regarding Stifel Financial Corp. (NYSE:SF).
Hedge fund activity in Stifel Financial Corp. (NYSE:SF)
At the end of Q3, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 19% from a quarter earlier. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available 13F holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates, had the biggest position in Stifel Financial Corp. (NYSE:SF), worth close to $57.1 million, comprising 0.3% of its total 13F portfolio. Coming in second is Ken Fisher’s Fisher Asset Management, with a $56.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Israel Englander’s Millennium Management, D. E. Shaw and Cliff Asness’ AQR Capital Management.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Hutchin Hill Capital, managed by Neil Chriss, initiated the largest position in Stifel Financial Corp. (NYSE:SF). Hutchin Hill Capital had $3.1 million invested in the company at the end of the quarter. George Hall’s Clinton Group also initiated a $1.6 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s also take a look at hedge fund activity in other stocks similar to Stifel Financial Corp. (NYSE:SF). We will take a look at Seadrill Ltd (NYSE:SDRL), Waddell & Reed Financial, Inc. (NYSE:WDR), SunPower Corporation (NASDAQ:SPWR), and John Wiley & Sons Inc (NYSE:JW). This group of stocks’ market values match Stifel Financial Corp. (NYSE:SF)’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. Seadrill Ltd (NYSE:SDRL) is the most popular stock in this table, while John Wiley & Sons Inc (NYSE:JW) is the least popular one with only 15 bullish hedge fund positions. Stifel Financial Corp. (NYSE:SF) is not the most popular stock in this group, but the hedge fund interest is still above average. This is not necessarily a bullish sign, but if you are looking at the next stock to buy, Stifel may be worth a more detailed analysis.