There are several ways to beat the market, and investing in the right small-cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small-cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small-cap picks. In this article, we use hedge fund filing data to analyze Vocera Communications Inc (NYSE:VCRA).
Vocera Communications Inc was in 14 hedge funds’ portfolios at the end of the third quarter of 2015. Overall sentiment was unchanged, as there were 14 hedge funds in our database with VCRA holdings at the end of the previous quarter. At the end of this article we will also compare VCRA to other stocks including Brookfield Total Return Fund Inc (NYSE:HTR), JTH Holding Inc (NASDAQ:TAX), and Insteel Industries Inc (NASDAQ:IIIN) to get a better sense of its popularity.
If you’d ask most stock holders, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are over 8,000 funds trading at present, experts at Insider Monkey, a website specializing in hedge funds, choose to focus on the leaders of this club, approximately 700 funds. Most estimates calculate that this group of people preside over most of the smart money’s total capital, and by keeping an eye on their matchless stock picks, Insider Monkey has found a few investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in its back tests.
Now, let’s review the fresh action surrounding Vocera Communications Inc (NYSE:VCRA).
What does the smart money think about Vocera Communications Inc (NYSE:VCRA)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish in this stock, unchanged from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially.
According to hedge fund intelligence website Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in Vocera Communications Inc (NYSE:VCRA). Renaissance Technologies has a $5.6 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Renaissance Technologies’ heels is Josh Goldberg of G2 Investment Partners Management, with a $5 million position; the fund manager has 1.9% of his 13F portfolio invested in the stock. Some other hedgies that are bullish include Brian C. Freckmann’s Lyon Street Capital, Chuck Royce’s Royce & Associates, and David E. Shaw’s D E Shaw.
Because Vocera Communications Inc (NYSE:VCRA) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who were dropping their positions entirely by the end of the third quarter. Intriguingly, Mark Coe’s Coe Capital Management sold off the biggest position of the 700 funds watched by Insider Monkey, totaling an estimated $0.9 million in stock. Ken Gray and Steve Walsh’s fund, Bryn Mawr Capital, also dumped its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Vocera Communications Inc (NYSE:VCRA). These stocks are Brookfield Total Return Fund Inc (NYSE:HTR), JTH Holding Inc (NASDAQ:TAX), Insteel Industries Inc (NASDAQ:IIIN), and Jones Energy Inc (NYSE:JONE). This group of stocks’ market values match VCRA’s market value.
|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 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $29 million, slightly greater than the $25 million in Vocera shares held by investors. Insteel Industries Inc (NASDAQ:IIIN) is the most popular stock in this table. On the other hand Brookfield Total Return Fund Inc (NYSE:HTR) is the least popular one with only four bullish hedge fund positions. Compared to these stocks Vocera Communications Inc (NYSE:VCRA) is more popular among hedge funds. Considering that hedge funds are generally fond of this stock compared to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.