Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Is DeVry Education Group Inc (NYSE:DV) a buy right now? Prominent investors are in an optimistic mood. The number of bullish hedge fund bets went up by 3 lately. DV was in 26 hedge funds’ portfolios at the end of the third quarter of 2016. There were 23 hedge funds in our database with DV holdings at the end of the previous quarter. At the end of this article we will also compare DV to other stocks including TowneBank (NASDAQ:TOWN), Clearwater Paper Corp (NYSE:CLW), and Portfolio Recovery Associates, Inc. (NASDAQ:PRAA) to get a better sense of its popularity.
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.
With all of this in mind, let’s take a glance at the recent action encompassing DeVry Education Group Inc (NYSE:DV).
What have hedge funds been doing with DeVry Education Group Inc (NYSE:DV)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, up 13% from the second quarter of 2016. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Charles de Vaulx’s International Value Advisers has the biggest position in DeVry Education Group Inc (NYSE:DV), worth close to $249.2 million, amounting to 7.4% of its total 13F portfolio. Coming in second is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which holds a $50.6 million position; 0.4% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism encompass John W. Rogers’s Ariel Investments, Noah Levy and Eugene Dozortsev’s Newtyn Management and Chuck Royce’s Royce & Associates.
Now, specific money managers were leading the bulls’ herd. Valtura Capital Partners, managed by Neal Shah, initiated the biggest position in DeVry Education Group Inc (NYSE:DV). The fund reportedly had $3.1 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $1.3 million position during the quarter. The other funds with brand new DV positions are Glenn Russell Dubin’s Highbridge Capital Management, Mike Vranos’s Ellington, and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to DeVry Education Group Inc (NYSE:DV). These stocks are TowneBank (NASDAQ:TOWN), Clearwater Paper Corp (NYSE:CLW), Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), and BofI Holding, Inc. (NASDAQ:BOFI). This group of stocks’ market values resemble DV’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 13 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $479 million in DV’s case. BofI Holding, Inc. (NASDAQ:BOFI) is the most popular stock in this table. On the other hand Portfolio Recovery Associates, Inc. (NASDAQ:PRAA) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks DeVry Education Group Inc (NYSE:DV) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.