Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Blue Buffalo Pet Products Inc (NASDAQ:BUFF) an excellent investment now? Hedge funds are becoming more confident. The number of long hedge fund bets rose by 2 recently. BUFF was in 28 hedge funds’ portfolios at the end of the third quarter of 2016. There were 26 hedge funds in our database with BUFF positions at the end of the previous quarter. At the end of this article we will also compare BUFF to other stocks including Donaldson Company, Inc. (NYSE:DCI), Equity One, Inc. (NYSE:EQY), and People’s United Financial, Inc. (NASDAQ:PBCT) 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.
What does the smart money think about Blue Buffalo Pet Products Inc (NASDAQ:BUFF)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, an 8% increase from the previous quarter and the second-straight quarter with a surge in hedge fund ownership. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Hitchwood Capital Management, managed by James Crichton, holds the number one position in Blue Buffalo Pet Products Inc (NASDAQ:BUFF). Hitchwood Capital Management has an $85.5 million position in the stock, comprising 2.6% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $42.2 million position. Other members of the smart money that hold long positions encompass Anand Parekh’s Alyeska Investment Group, Jim Simons’ Renaissance Technologies and Dmitry Balyasny’s Balyasny Asset Management.