Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Rio Tinto plc (ADR) (NYSE:RIO) investors should be aware of a decrease in support from the world’s most successful money managers of late. There were 21 hedge funds in our database with RIO 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 E I Du Pont De Nemours And Co (NYSE:DD), Banco Santander, S.A. (ADR) (NYSE:SAN), and Itau Unibanco Holding SA (ADR) (NYSE:ITUB) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Now, we’re going to check out the recent action surrounding Rio Tinto plc (ADR) (NYSE:RIO).
What does the smart money think about Rio Tinto plc (ADR) (NYSE:RIO)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 14% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards RIO over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Robert Bishop’s Impala Asset Management has the largest position in Rio Tinto plc (ADR) (NYSE:RIO), worth close to $112.2 million, accounting for 7.4% of its total 13F portfolio. The second most bullish fund manager is Luminus Management, led by Jonathan Barrett and Paul Segal, holding a $98.9 million position; 2.5% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Ken Heebner’s Capital Growth Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that two of these hedge funds (Impala Asset Management and Luminus Management) 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.