Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Clearwater Paper Corp (NYSE:CLW).
Is Clearwater Paper Corp (NYSE:CLW) a buy here? Hedge funds are indeed becoming more confident. The number of long hedge fund positions that are disclosed in regulatory 13F filings improved by 1 in recent months. CLW was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. There were 12 hedge funds in our database with CLW holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS), Analogic Corporation (NASDAQ:ALOG), and McEwen Mining Inc (NYSE:MUX) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How are hedge funds trading Clearwater Paper Corp (NYSE:CLW)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 8% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in CLW over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Jay Petschek and Steven Major’s Corsair Capital Management has the largest position in Clearwater Paper Corp (NYSE:CLW), worth close to $14.1 million, corresponding to 2.3% of its total 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $7 million position. Other hedge funds and institutional investors that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies, one of the largest hedge funds in the world, and Israel Englander’s Millennium Management. 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.