Should You Following the Growing Number of Hedge Funds into Quad/Graphics, Inc. (QUAD)?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Quad/Graphics, Inc. (NYSE:QUAD) a buy, sell, or hold? Money managers are getting more optimistic. The number of bullish hedge fund bets advanced by 3 lately. QUAD was in 21 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with QUAD 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 Celestica Inc. (USA) (NYSE:CLS), Nationstar Mortgage Holdings Inc (NYSE:NSM), and II-VI, Inc. (NASDAQ:IIVI) to gather more data points.

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Hedge fund activity in Quad/Graphics, Inc. (NYSE:QUAD)

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a 17% rise from one quarter earlier, and the third consecutive quarter in which the number of hedge funds long the stock increased. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the most valuable position in Quad/Graphics, Inc. (NYSE:QUAD), worth close to $39.4 million. The second most bullish fund manager is Elm Ridge Capital, led by Ron Gutfleish, holding a $13.5 million position; 3.2% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism comprise Cliff Asness’ AQR Capital Management, Joel Greenblatt’s Gotham Asset Management and Israel Englander’s Millennium Management.

As aggregate interest increased, key hedge funds have been driving this bullishness. Clinton Group, managed by George Hall, initiated the most outsized position in Quad/Graphics, Inc. (NYSE:QUAD). Clinton Group had $0.4 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Thomas Bailard’s Bailard Inc, Ken Griffin’s Citadel Investment Group, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s go over hedge fund activity in other stocks similar to Quad/Graphics, Inc. (NYSE:QUAD). These stocks are Celestica Inc. (USA) (NYSE:CLS), Nationstar Mortgage Holdings Inc (NYSE:NSM), II-VI, Inc. (NASDAQ:IIVI), and Tutor Perini Corp (NYSE:TPC). This group of stocks’ market values match QUAD’s market value.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $108 million in QUAD’s case. II-VI, Inc. (NASDAQ:IIVI) is the most popular stock in this table. On the other hand Celestica Inc. (USA) (NYSE:CLS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Quad/Graphics, Inc. (NYSE:QUAD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None