Do Hedge Funds Love Electrum Special Acquisition Corp (ELEC)?

The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Electrum Special Acquisition Corp (NASDAQ:ELEC) in order to identify whether reputable and successful top money managers continue to believe in its potential.

Electrum Special Acquisition Corp (NASDAQ:ELEC) was in 17 hedge funds’ portfolios at the end of September. ELEC shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. There were 18 hedge funds in our database with ELEC positions at the end of the previous quarter. At the end of this article we will also compare ELEC to other stocks, including Sigma Designs Inc (NASDAQ:SIGM), RadNet Inc. (NASDAQ:RDNT), and Kandi Technologies Group Inc (NASDAQ:KNDI) to get a better sense of its popularity.

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To most traders, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, Our experts hone in on the upper echelon of this group, around 700 funds. These hedge fund managers have their hands on the majority of the hedge fund industry’s total asset base, and by tailing their top stock picks, Insider Monkey has figured out numerous investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, we’re going to view the latest action encompassing Electrum Special Acquisition Corp (NASDAQ:ELEC).

Hedge fund activity in Electrum Special Acquisition Corp (NASDAQ:ELEC)

Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 6% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, John A. Levin’s Levin Capital Strategies has the number one position in Electrum Special Acquisition Corp (NASDAQ:ELEC), worth close to $11.6 million and accounting for 0.2% of its total 13F portfolio. The second largest stake is held by Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, which holds a $10.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass Jeffrey Tannenbaum’s Fir Tree, Brian Taylor’s Pine River Capital Management and Robert Pitts’s Steadfast Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Electrum Special Acquisition Corp (NASDAQ:ELEC) but similarly valued. These stocks are Sigma Designs Inc (NASDAQ:SIGM), RadNet Inc. (NASDAQ:RDNT), Kandi Technologies Group Inc (NASDAQ:KNDI), and Natural Gas Services Group, Inc. (NYSE:NGS). This group of stocks’ market values is closest to an ELEC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SIGM 21 33221 2
RDNT 14 33702 0
KNDI 4 976 0
NGS 9 34127 0

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $120 million in ELEC’s case. Sigma Designs Inc (NASDAQ:SIGM) is the most popular stock in this table, while Kandi Technologies Group Inc (NASDAQ:KNDI) is the least popular one with only 4 bullish hedge fund positions. Although Electrum Special Acquisition Corp (NASDAQ:ELEC) is not the most popular stock in this group, hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SIGM might be a better candidate to consider a long position.