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 elite funds in these small-cap stocks. In the following paragraphs, we analyze PDC Energy Inc (NASDAQ:PDCE) from the perspective of those elite funds.
PDC Energy Inc (NASDAQ:PDCE) investors should be aware of an increase in hedge fund interest in recent months. PDCE was in 22 hedge funds’ portfolios at the end of the third quarter of 2016. There were 17 hedge funds in our database with PDCE positions at the end of the previous quarter. At the end of this article we will also compare PDCE to other stocks including LaSalle Hotel Properties (NYSE:LHO), Fitbit Inc (NYSE:FIT), and Littelfuse, Inc. (NASDAQ:LFUS) to get a better sense of its popularity.
Follow Pdc Energy Inc. (NASDAQ:PDCE)
Follow Pdc Energy Inc. (NASDAQ:PDCE)
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.
PLRANG ART/Shutterstock.com
Keeping this in mind, we’re going to check out the recent action surrounding PDC Energy Inc (NASDAQ:PDCE).
How are hedge funds trading PDC Energy Inc (NASDAQ:PDCE)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a boost of 29% from the second quarter of 2016. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Alyeska Investment Group, managed by Anand Parekh, holds the most valuable position in PDC Energy Inc (NASDAQ:PDCE). According to regulatory filings, the fund has a $64.5 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by D E Shaw, managed by David E. Shaw, which holds a $31.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Jonathon Jacobson’s Highfields Capital Management, Daniel S. Och’s OZ Management and Dmitry Balyasny’s Balyasny Asset Management.
Consequently, some big names were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, initiated the most valuable position in PDC Energy Inc (NASDAQ:PDCE). Jonathon Jacobson’s Highfields Capital Management also made a $26.8 million investment in the stock during the quarter. The following funds were also among the new PDCE investors: Daniel S. Och’s OZ Management, Richard Driehaus’s Driehaus Capital, and Leon Cooperman’s Omega Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to PDC Energy Inc (NASDAQ:PDCE). These stocks are LaSalle Hotel Properties (NYSE:LHO), Fitbit Inc (NYSE:FIT), Littelfuse, Inc. (NASDAQ:LFUS), and SLM Corp (NASDAQ:SLM). All of these stocks’ market caps are closest to PDCE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LHO | 13 | 21906 | -1 |
| FIT | 35 | 442510 | 6 |
| LFUS | 14 | 178544 | 0 |
| SLM | 19 | 170828 | -5 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $278 million in PDCE’s case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand LaSalle Hotel Properties (NYSE:LHO) is the least popular one with only 13 bullish hedge fund positions. PDC Energy Inc (NASDAQ:PDCE) 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 FIT might be a better candidate to consider a long position.
Disclosure: none.
