Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is SPX Corporation (NYSE:SPXC) the right investment to pursue these days? Hedge funds are betting on the stock as 24 funds reported long positions in the company as of September 30. 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 Scorpio Bulkers Inc (NYSE:SALT), RealD (NYSE:RLD), and Northwest Biotherapeutics, Inc (NASDAQ:NWBO) to gather more data points.
Today there are numerous signals market participants put to use to value publicly traded companies. A couple of the most underrated signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best money managers can outperform the broader indices by a solid amount (see the details here).
Keeping this in mind, we’re going to take a glance at the recent action encompassing SPX Corporation (NYSE:SPXC).
What does the smart money think about SPX Corporation (NYSE:SPXC)?
When looking at the institutional investors followed by Insider Monkey, Relational Investors holds the largest position in SPX Corporation (NYSE:SPXC). Relational Investors has a $10.4 million position in the stock, comprising 1.2% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds an $10.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Ken Griffin’s Citadel Investment Group, Steve Cohen’s Point72 Asset Management and Jim Simons’s Renaissance Technologies.
Let’s now take a look at hedge fund activity in other stocks similar to SPX Corporation (NYSE:SPXC). We will take a look at Scorpio Bulkers Inc (NYSE:SALT), RealD (NYSE:RLD), Northwest Biotherapeutics, Inc (NASDAQ:NWBO), and ShoreTel, Inc. (NASDAQ:SHOR). This group of stocks’ market valuations are similar to SPXC’s market valuation.
|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 17 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $77 million in SPXC’s case. ShoreTel, Inc. (NASDAQ:SHOR) is the most popular stock in this table. On the other hand Northwest Biotherapeutics, Inc (NASDAQ:NWBO) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks SPX Corporation (NYSE:SPXC) 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.