Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
In this article, we will discuss the latest hedge fund activity surrounding WMIH Corp. (NASDAQ:WMIH). At the end of September, the company was included in the equity portfolios of 30 funds from our database. The company saw a slight increase in enthusiasm from smart money in the third quarter, as there had been 29 funds long WMIH at the end of June. At the end of this article we will also compare WMIH to other stocks including Lion Biotechnologies Inc (NASDAQ:LBIO), ReTailMeNot Inc (NASDAQ:SALE), and PTC Therapeutics, Inc. (NASDAQ:PTCT) to get a better sense of its popularity.
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. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
Keeping this in mind, we’re going to take a glance at the new action surrounding WMIH Corp. (NASDAQ:WMIH).
How have hedgies been trading WMIH Corp. (NASDAQ:WMIH)?
At the end of the third quarter, 30 funds tracked by Insider Monkey were long WMIH, up by 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WMIH 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 upping their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Greywolf Capital Management, led by Jonathan Savitz, holds the largest position in WMIH Corp. (NASDAQ:WMIH). Greywolf Capital Management has a $27.4 million position in the stock, comprising 5.7% of its 13F portfolio. Sitting at the No. 2 spot is Michael Kaine’s Numina Capital, which holds a $18.9 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include David Tepper’s Appaloosa Management LP, Stephen J. Errico’s Locust Wood Capital Advisers, and Anthony Bozza’s Lakewood Capital Management. We should note that none of these hedge funds 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.
As aggregate interest increased, specific money managers were breaking ground themselves. Daniel S. Och’s OZ Management initiated the most valuable position in WMIH Corp. (NASDAQ:WMIH). OZ Management had $1.2 million invested in the company at the end of the quarter. William Black’s Consector Capital also made a $0.6 million investment in the stock during the quarter. Two other funds with brand new WMIH positions are Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks similar to WMIH Corp. (NASDAQ:WMIH). We will take a look at Lion Biotechnologies Inc (NASDAQ:LBIO), ReTailMeNot Inc (NASDAQ:SALE), PTC Therapeutics, Inc. (NASDAQ:PTCT), and Fidelity Southern Corporation (NASDAQ:LION). All of these stocks’ market caps are similar to WMIH’s market cap.
|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 16 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $119 million in WMIH’s case. Lion Biotechnologies Inc (NASDAQ:LBIO) is the most popular stock in this table, while Fidelity Southern Corporation (NASDAQ:LION) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks WMIH Corp. (NASDAQ:WMIH) 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.