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.
One stock that saw the number of funds from our database with long bets increase between July and September is FTD Companies Inc (NASDAQ:FTD). There were 14 funds with FTD positions at the end of the third quarter. At the end of this article we will also compare FTD to other stocks including Sodastream International Ltd (NASDAQ:SODA), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), and AEP Industries (NASDAQ:AEPI) to get a better sense of its popularity.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Keeping this in mind, we’re going to analyze the recent action encompassing FTD Companies Inc (NASDAQ:FTD).
What does the smart money think about FTD Companies Inc (NASDAQ:FTD)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on FTD Companies, up by two funds from the end of June. On the other hand, there were a total of 10 hedge funds with a bullish position in FTD at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Thomas E. Claugus’ GMT Capital holds the largest position in FTD Companies Inc (NASDAQ:FTD). GMT Capital has a $33.2 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, which holds a $7.5 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Ken Griffin’s Citadel Investment Group, Millennium Management, one of the 10 largest hedge funds in the world, and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, key hedge funds have jumped into FTD Companies Inc (NASDAQ:FTD) headfirst. Gotham Asset Management, led by Joel Greenblatt, assembled the largest position in FTD Companies Inc (NASDAQ:FTD). Gotham Asset Management had $0.5 million invested in the company at the end of the quarter. Joshua Packwood and Schuster Tanger’s Radix Partners also initiated a $0.4 million position during the quarter. The other funds with brand new FTD positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s also examine hedge fund activity in other stocks similar to FTD Companies Inc (NASDAQ:FTD). These stocks are Sodastream International Ltd (NASDAQ:SODA), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), AEP Industries (NASDAQ:AEPI), and Connecticut Water Service, Inc. (NASDAQ:CTWS). This group of stocks’ market caps match FTD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SODA | 16 | 66834 | 3 |
| SCHN | 14 | 91577 | -1 |
| AEPI | 13 | 141668 | 1 |
| CTWS | 6 | 14878 | 1 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $79 million, compared to $51 million in FTD’s case. Sodastream International Ltd (NASDAQ:SODA) is the most popular stock in this table, while Connecticut Water Service, Inc. (NASDAQ:CTWS) is the least popular one with only six bullish hedge fund positions. FTD Companies Inc (NASDAQ:FTD) 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 Sodastream International Ltd (NASDAQ:SODA) might be a better candidate to consider taking a long position in.
Disclosure: none
