5 Small-cap Stocks Billionaires Are Piling Into

#3 WebMD Health Corp. (NASDAQ:WBMD)

– Number of Billionaire Shareholders (as of September 30): 6
– Total Value of Billionaire Holdings (as of September 30): $101.84 million

Although Google is showing more health information directly in its search results and the stock has retraced since June on slowing growth concerns, WebMD Health Corp. (NASDAQ:WBMD) shares are still up by 10.9% year-to-date. Traffic to the company’s health network sites brought in 184 million unique users per month in the third quarter, down by 11% year-over-year. Revenue for Q3 rose by 15% year-over-year, however, as management improved targeting. 6 billionaires that we track reported holding stakes in the internet health portal as of the end of the third quarter.

#2 Viavi Solutions Inc (NASDAQ:VIAV)

– Number of Billionaire Shareholders (as of September 30): 6
– Total Value of Billionaire Holdings (as of September 30): $123.66 million

Six billionaire investors also reported holding stakes in Viavi Solutions Inc (NASDAQ:VIAV) as of the end of September, up from four at the end of June. Shares of the company have rallied by 31.5% year-to-date, aided by a strong fiscal first quarter earnings report in which Viavi beat both top- and bottom-line expectations with EPS of $0.09 on sales of $210.8 million. Rod Hall of JPMorgan believes that spending in testing end markets could strengthen in 2017 and that Viavi could potentially benefit from 3D sensing in smartphones as well. Hall has a $10 price target and an ‘Overweight’ rating on the stock.

#1 Dynegy Inc. (NYSE:DYN)

– Number of Billionaire Shareholders (as of September 30): 8
– Total Value of Billionaire Holdings (as of September 30): $448.44 million

With 8 billionaire investors holding $448.44 million worth of the equity at the end of Q3, Dynegy Inc. (NYSE:DYN) is the top small-cap stock among the billionaires in our database. Despite (or rather, because of) the fact that it’s down by 33% year-to-date, analyst Devin McDermott of Morgan Stanley views Dynegy’s valuation as compelling given the stock’s long-term fundamentals. In addition, McDermott believes Dynegy’s free cash flow will bounce back in 2018 and 2019 and help reduce the company’s leverage. Given the cheap valuation, McDermott believes Dynegy has optionality in that the stock could be a buyout candidate or the company could participate in some M&A that might unlock value.

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