The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Lawson Products, Inc. (NASDAQ:LAWS) from the perspective of those elite funds.
Lawson Products, Inc. (NASDAQ:LAWS) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. LAWS was in 6 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with LAWS positions 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 Adept Technology Inc (NASDAQ:ADEP), Nabriva Therapeutics AG-ADR (NASDAQ:NBRV), and Radiant Logistics, Inc. (NYSEMKT:RLGT) to gather more data points.
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In the eyes of most investors, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are more than 8000 funds trading today, We hone in on the masters of this club, about 700 funds. It is estimated that this group of investors control most of the hedge fund industry’s total capital, and by keeping an eye on their finest stock picks, Insider Monkey has brought to light numerous investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s take a peek at the key action encompassing Lawson Products, Inc. (NASDAQ:LAWS).
Hedge fund activity in Lawson Products, Inc. (NASDAQ:LAWS)
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 20% from the second quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Lawson Products, Inc. (NASDAQ:LAWS), valued at $4.9 million and comprising less than 0.1% of its 13F portfolio. On GAMCO Investors’s heels is Renaissance Technologies, led by Jim Simons, holding a $1.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Peter Schliemann’s Rutabaga Capital Management, Chuck Royce’s Royce & Associates and Israel Englander’s Millennium Management.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Lawson Products, Inc. (NASDAQ:LAWS) headfirst. Millennium Management, managed by Israel Englander, established the most outsized position in Lawson Products, Inc. (NASDAQ:LAWS). The fund had $0.8 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also made a $15,000 investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Lawson Products, Inc. (NASDAQ:LAWS) but similarly valued. These stocks are Adept Technology Inc (NASDAQ:ADEP), Nabriva Therapeutics AG-ADR (NASDAQ:NBRV), Radiant Logistics, Inc. (NYSEMKT:RLGT), and GP Investments Acquisition Corp (NASDAQ:GPIAU). This group of stocks’ market valuations are similar to LAWS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADEP | 8 | 19825 | 3 |
| NBRV | 8 | 30698 | 8 |
| RLGT | 12 | 19430 | 3 |
| GPIAU | 8 | 50035 | -1 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was a meager $9 million in the case of LAWS. Radiant Logistics, Inc. (NYSEMKT:RLGT) is the most popular stock in this table, while the other three stocks have accumulated the same number of hedge fund long positions. Lawson Products, Inc. (NASDAQ:LAWS) is less popular than all the stocks in this group. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
