Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 5.2% during the last 12 months ending October 30, 2015. Less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 S&P 500 stocks among hedge funds at the end of September 2014 had an average return of 9.5% during the same period. Sixty three percent of these 30 stocks outperformed the market. Hedge funds had bad stock picks like everyone else. Micron, which lost 50% over this period, was one of hedge funds’ 30 favorite S&P 500 stocks. Anadarko Petroleum was another failed stock pick which lost more than 26%. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Points International Ltd (USA) (NASDAQ:PCOM).
Points International Ltd (USA) (NASDAQ:PCOM) investors should be aware of a decrease in support from the world’s most elite money managers of late. PCOM was in 10 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with PCOM holdings at the end of the previous quarter. At the end of this article we will also compare PCOM to other stocks, including Synergetics USA Inc (NASDAQ:SURG), IMPAC Mortgage Holdings, Inc (NYSEMKT:IMH), and KCAP Financial Inc (NASDAQ:KCAP) to get a better sense of its popularity.
According to most shareholders, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation at present, Our researchers choose to focus on the aristocrats of this group, approximately 700 funds. These money managers administer most of the hedge fund industry’s total asset base, and by tailing their highest performing investments, Insider Monkey has found several investment strategies that have historically exceeded Mr. Market. 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, we’re going to review the fresh action encompassing Points International Ltd (USA) (NASDAQ:PCOM).
What does the smart money think about Points International Ltd (USA) (NASDAQ:PCOM)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, J. Carlo Cannell’s Cannell Capital has the number one position in Points International Ltd (USA) (NASDAQ:PCOM), worth close to $8.4 million, amounting to 3.1% of its total 13F portfolio. Sitting at the No. 2 spot is Simcoe Capital Management, managed by Jeffrey Jacobowitz, which holds an $6.5 million position; the fund has 4.3% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Jim Simons’ Renaissance Technologies, Mark Broach’s Manatuck Hill Partners and Adam Usdan’s Trellus Management Company.
Judging by the fact that Points International Ltd (USA) (NASDAQ:PCOM) has faced bearish sentiment from hedge fund managers, logic holds that there was a specific group of funds that elected to cut their positions entirely last quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest stake of the 700 funds tracked by Insider Monkey, valued at about $0.1 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Points International Ltd (USA) (NASDAQ:PCOM) but similarly valued. We will take a look at Synergetics USA Inc (NASDAQ:SURG), IMPAC Mortgage Holdings, Inc (NYSEMKT:IMH), KCAP Financial Inc (NASDAQ:KCAP), and Veritex Holdings Inc (NASDAQ:VBTX). All of these stocks’ market caps resemble PCOM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SURG | 11 | 39263 | 0 |
| IMH | 5 | 1884 | 0 |
| KCAP | 6 | 7152 | 1 |
| VBTX | 6 | 26404 | 0 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $22 million in PCOM’s case. Synergetics USA Inc (NASDAQ:SURG) is the most popular stock in this table. On the other hand IMPAC Mortgage Holdings, Inc (NYSEMKT:IMH) is the least popular one with only 5 bullish hedge fund positions. Points International Ltd (USA) (NASDAQ:PCOM) is not the most popular stock in this group, but 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 SURG might be a better candidate to consider a long position.