Quantitative hedge funds have been on an absolute tear over the past few months, posting gains in 15 of the past 17 weeks according to data compiled by Societe Generale. Quant funds, which include some of the biggest hedge funds in the world, use algorithms to instantly trade stocks based on any number of preset conditions, such as the stock’s moving average or other technical indicators. As volatility rises, these funds tend to perform better, as more trading opportunities arise, and that’s been the case during this volatile early stretch in 2018.
In this article, we’re going to look at the collective trading patterns of three of the most successful quant hedge funds in the world: David Harding‘s Winton Capital, Jim Simons‘ Renaissance Technologies, and John Overdeck and David Siegel’s Two Sigma Advisors. All three funds have filed their 13Fs for the December quarter, revealing their stock positions as of the end of 2017, and at least two of them opened positions in each of the three small-cap stocks profiled in this article. Is it time to piggyback billionaire quants into these stocks? Let’s take a look at them and see.
At Insider Monkey, we track insider trading and hedge fund activity to uncover actionable patterns and profit from them. We track over 600 of the most successful hedge funds ever in our database and identify only their best stock picks. Hedge funds are like many other companies in that they bundle products (in this case, stock picks) together and sell them to customers (investors) as a package deal. That means you get their 73rd-best pick along with their best pick, and who wants to pay exorbitant fees for a fund’s 73rd-best idea when you could instead invest in only their best ideas? Our newest stock picks will be released in mere days, which investors can gain access to by becoming a subscriber to Insider Monkey’s premium newsletters.
Sleep Number Corp (NASDAQ:SNBR)
New Positions: Winton Capital (168,349 shares), Renaissance Technologies (59,820 shares)
Existing Position: Two Sigma Advisors (+8,200 shares, 171,200 shares total)
About Sleep Number Corp (NASDAQ:SNBR): Previously known as Select Comfort, Sleep Number changed its name last November to align itself with its well-known brand of adjustable mattresses, which use a number system to denote the level of support that is being provided by the mattress. This number, and the accompanying firmness of the mattress, can be adjusted at any time. Many of the company’s mattresses also feature DualAir technology, which allows each side of the bed to be adjusted separately to fit the different needs of a bed’s occupants.
How the Steinhoff Scandal May Affect Sleep Number Corp (NASDAQ:SNBR): South African furniture giant Steinhoff has been embroiled in an accounting scandal over the past two months, one that lead to the resignation of the company’s CEO. Analysts believe the upheaval at the company, which has since made several moves to try and improve its liquidity, will only benefit Sleep Number and rival Tempur Sealy International Inc (NYSE:TPX).
Sleep Number Corp (NASDAQ:SNBR) at CES 2018: At last month’s CES 2018, a prominent annual tech gathering, Sleep Number showed off its Sleep Number 360 smart bed, which can detect everything from cases of sleep apnea to impending heart attacks through its tracking of hundreds of different measurements in real-time. Users can then review their sleep data in the morning, including seeing how restful their sleep was and their breathing rate. The bed became available last May.
On the next page we’ll look at two more small-cap stocks that billionaire quants piled on in Q4.