11 Best New Company Stocks to Buy in 2017

If you’re on the lookout for interesting new investment opportunities, we’ve compiled a list of the 11 best new company stocks to buy in 2017.

Whether through IPOs or spinoffs, the appearance of new stocks on the market often leads to a great deal of excitement among investors. Whereas it’s hard to get very excited about a stock that’s already been trading for 50 years, a new stock has a clean slate and boundless potential; or at least that’s the perception.

However, that perception can be faulty, as companies now appear to be more adept at pricing their public offerings closer to the stock’s actual value in the eyes of market participants. 2016 was a bleak one for IPOs in particular, 119 of which collected just $18.5 billion in proceeds and had returned just 0.9% through December 12, well below the returns of the major indices.

However, there were a few standout performers. Acacia Communications, Inc. (NASDAQ:ACIA), AveXis Inc (NASDAQ:AVXS), Novan Inc (NASDAQ:NOVN), IMPINJ Inc (NASDAQ:PI), and Twilio Inc (NYSE:TWLO) all gained more than 100% in 2016 through December 12. Ichor Holdings Ltd (NASDAQ:ICHR), which had a late-2016 IPO has also been a huge performer, with lifetime gains of 135%.

At Insider Monkey, we routinely monitor and report on hedge fund activity when it comes to IPOs to try and give our readers a leg up on the competition. We track over 700 of the most successful hedge funds ever in our database and identify only their best stock picks. Our flagship strategy has gained 44% since February 2016 and our stock picks released in the middle of February 2017 gained over 5 percentage points in the three months that followed. Our latest stock picks were released last month, which investors can gain access to by becoming a subscriber to Insider Monkey’s premium newsletters.

Turning to hedge funds is particularly relevant in the case of new stocks, in which there is often limited information available for investors to make trading decisions. These stocks have a small history of trading activity with which to make determinations based on technical aspects, while information on their financial results is often limited as well, making it challenging to judge just how fast a company is growing. Hedge funds however have more in-depth information on these companies than just about anyone, which allows them to better judge a company’s worth.

In this article, we’ll use hedge fund sentiment to gauge the investment opportunities in the batch of new stocks to hit the market during the first quarter of this year, using 13F filings for the March 31 reporting period to identify how many top hedge funds were investors of each new stock. Check out the list of the 11 best new company stocks to buy in 2017 beginning on the next page. Note that Welbilt Inc (NYSE:WBT) was not considered a new stock, as it simply changed its name (from Manitowoc).

For some other great investment ideas, don’t miss our article on the 11 best food company stocks to buy now.

11. Mulesoft Inc (NYSE:MULE)

– Number of Hedge Funds With Long Positions (as of March 31): 18
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $98 million

First up is Mulesoft Inc (NYSE:MULE), a software company that attempts to be a digital data mule for its customers through a pluggable application network that connects any or all of their services. The company claims that its Anypoint Platform allows customers’ development teams to be 300% more productive and launch apps 200% faster. $40 billion hedge fund Adage Capital Management took a 1.5 million-share stake in the company in the first quarter.

10. Gores Holdings II, Inc. (NASDAQ:GSHT)

– Number of Hedge Funds With Long Positions (as of March 31): 18
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $266 million

Next up is Gores Holdings II, Inc. (NASDAQ:GSHT), the second blank check company recently formed by the Gores Group. The first, Gores Holdings, had its IPO in 2015 and took a majority stake in Hostess Brands in the middle of last year. It began trading under the name Hostess Brands, Inc. (NASDAQ:TWNK) after the completion of that deal. As with the first Gores Holdings, the second incarnation will also seek out a merger, acquisition or other partnership with the proceeds from its public offering. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital took a 3 million-share stake in the company during Q1.

9. Ardagh Group SA (NYSE:ARD)

– Number of Hedge Funds With Long Positions (as of March 31): 19
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $181 million

Ardagh Group SA (NYSE:ARD) ranks ninth on our list after 19 hedge funds grabbed shares of the packaging company during Q1. Joshua Friedman and Mitchell Julis’ Canyon Capital Advisors took the largest position in it, consisting of 1.95 million shares. Analysts are split on the stock, with Deutsche Bank and Citi rating it a ‘Buy’, while JPMorgan and Goldman Sachs initiated it at ‘Neutral’. All four investment firms have price targets on the stock of between $23 and $25, suggesting muted upside potential. Shares of the company are 15.7% above their IPO price.

8. Keane Group Inc (NYSE:FRAC)

– Number of Hedge Funds With Long Positions (as of March 31): 19
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $182 million

Keane Group Inc (NYSE:FRAC) was also held by 19 funds on March 31, including Leon Cooperman’s Omega Advisors, owner of 2.19 million shares. The billionaire investor named the stock as one of his favorite energy picks during a CNBC interview at the end of May. Keane shares have had a rough run thus far, being down by 30% in 2017.

7. Jeld-Wen Holding Inc (NYSE:JELD)

– Number of Hedge Funds With Long Positions (as of March 31): 22
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $282 million

Next is Jeld-Wen Holding Inc (NYSE:JELD), which finally went public in the first quarter after being in operation as a private company since 1960. Despite a secondary offering in May, shortly after its IPO, shares of Jeld-Wen have gained over 30% this year. The offerings have helped Jeld-Wen deleverage its balance sheet, which contained $1.6 billion in debt at the end of 2016. Richard S. Pzena‘s Pzena Investment Management owns 2.51 million shares of Jeld-Wen as of the end of March.

6. Playa Hotels & Resorts NV (NASDAQ:PLYA)

– Number of Hedge Funds With Long Positions (as of March 31): 25
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $518 million

Shares of the Netherlands-based Playa Hotels & Resorts NV (NASDAQ:PLYA) have remained in a very narrow range since the company’s mid-March IPO. Deutsche Bank analyst Chris Woronka is high on the resort specialist, believing it has a strong portfolio of properties and serves a favorable demographic. He has a $14 price target and ‘Buy’ rating on the stock. Thomas Steyer’s Farallon Capital is also a huge fan, having taken by far the largest position in the stock among institutional investors: a 28.7% stake of 30.29 million shares as of May 22.

5. Silver Run Acquisition Corporation II (NASDAQ:SRUN)

– Number of Hedge Funds With Long Positions (as of March 31): 32
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $778 million

Silver Run Acquisition Corporation II (NASDAQ:SRUN) is not only another blank check company, but another second-generation blank check company. Despite having its IPO at the tail-end of March, 32 hedge funds quickly pounced on the chance to buy shares. The first iteration of Silver Run Acquisition Corporation acquired a majority stake in Centennial Resource Production, and later renamed itself Centennial Resource Development Inc (NASDAQ:CDEV). That stock has gained 45% lifetime. Jonathon Jacobson’s Highfields Capital Management owns 11.5 million shares of Silver Run Acquisition Corporation II as of the end of March.

4. Snap Inc (NYSE:SNAP)

– Number of Hedge Funds With Long Positions (as of March 31): 32
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $970 million

One of the most prominent IPOs of the last year, Snap Inc (NYSE:SNAP) nonetheless fails to top our list of the 11 best new company stocks to buy in 2017. 32 hedge funds were long the stock on March 31, a modest amount for a relatively high-profile IPO. Snap also ranks as the most shorted tech IPO of 2017, with 28% of the stock’s float being sold short. Shares are barely hovering above the stock’s IPO price of $17 as Snap faces intense pressure from Facebook Inc (NASDAQ:FB)‘s Instagram, which continues to ‘borrow’ some of Snap’s most popular features. The latest such feature to be emulated was Snap’s Memories archive function, which Facebook just released a similar version of dubbed (rather blandly) Archive. Tech investor Philippe Laffont of Coatue Management took one of the largest stakes in Snap during the first quarter, amounting to 20.96 million shares.

3. Colony NorthStar Inc (NYSE:CLNS)

– Number of Hedge Funds With Long Positions (as of March 31): 33
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $1.29 billion

Colony NorthStar Inc (NYSE:CLNS) tops Snap, ranking third on our list with 33 hedge fund backers on March 31, among them Seth Klarman’s Baupost Group and David Abrams’ Abrams Capital. Colony NorthStar emerged from a 3-way merger between Colony Capital, NorthStar Asset Management, and NorthStar Realty Finance, which was completed in early-January, giving the combined entity $58 billion in assets under management.

2. Seaside Exploration Partners Corp (NYSE:CJ)

– Number of Hedge Funds With Long Positions (as of March 31): 34
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $1.41 billion

Seaside Exploration Partners Corp (NYSE:CJ) (as Google Finance still calls it), otherwise known as C&J Energy Services, ranks second on our list. The stock was purchased by several iconic investors in Q1, including George Soros, Ken Griffin, and Julian Robertson. Analysts are also high on the oil services stock, believing it sports a more attractive valuation than many of its peers. The company’s Q1 EPS ($0.58) and revenue ($314.2 million) each handily topped estimates ($0.54 and $281.51 million respectively).

1. Bioverativ Inc (NASDAQ:BIVV)

– Number of Hedge Funds With Long Positions (as of March 31): 35
– Aggregate Value of Hedge Funds’ Holdings (as of March 31): $1.53 billion

Bioverativ Inc (NASDAQ:BIVV) tops our list of the 11 best new company stocks to buy in 2017, with more hedge funds invested in it than any other new stock, as well as more money invested in it. Arthur Cohen and Joseph Healey’s Healthcor Management was one of the 35 funds to buy shares (5 million) of the company in the first quarter, with the stock instantly becoming that fund’s top pick. Those investors have been rewarded with 23% year-to-date returns, boosted by the biotechnology company’s acquisition of True North Therapeutics in May, which adds to the company’s growing pipeline of promising early-stage treatments.

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