Many investors are on the horns of a dilemma when it comes to deciding between investing in value stocks or growth stocks. A growth-focused portfolio is generally anticipated to generate higher returns than a value-oriented portfolio, but the risks associated with the former are usually higher as well. Truth be told, great growth stock picks may definitely beat the broader market over a long-term investment horizon. Weatherbie Capital LLC is a Boston-based investment firm that specializes on small growth companies that can deliver both strong earnings growth and high investment quality. Put it differently, the investment firm founded by Matthew A. Weatherbie, seeks for reasonably-priced stocks relative to their growth and quality. Weatherbie Capital recently filed its 13F filing for the September quarter, so this article will lay out its five top stock picks.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 135% since then and outperformed the S&P 500 Index by around 80 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
#5 ExamWorks Group Inc. (NYSE:EXAM)
Shares Owned by Weatherbie Capital LLC (as of September 30): 1.18 million shares
Value of Holding (as of September 30): $34.38 million
Weatherbie Capital LLC upped its position in ExamWorks Group Inc. (NYSE:EXAM) by 153,547 shares or roughly 15% during the third quarter, which accounted for 3.99% of the firm’s equity portfolio on September 30. The provider of independent medical exams can be undeniably categorized as a growth company, considering that it has a forward P/E ratio of 39.92 (the ratio for the S&P 500 equals 17.65). ExamWorks Group’s stock is down 40% year-to-date, partly owing to the company’s weaker-than-expected revenue guidance for the fourth quarter and full-year. The company lowered its full-year revenue growth guidance to the range of 4.5%-to-5%, down from 4.5%-to-6.5%. James A. Noonan’s Pivot Point Capital owned 1.40 million shares in ExamWorks Group Inc. (NYSE:EXAM) on June 30.
#4 Signature Bank (NASDAQ:SBNY)
Shares Owned by Weatherbie Capital LLC (as of September 30): 250,913 shares
Value of Holding (as of September 30): $34.52 million
The Boston-based investment firm enlarged its stake in full-service commercial bank Signature Bank (NASDAQ:SBNY) by 7,083 shares during the September quarter. The commercial lender has seen its shares advance nearly 24% since the beginning of the year, and may go even higher should the Federal Reserve decide to raise interest rates this year. The company’s third-quarter net interest margin, which represents the ratio of the discrepancy between the interest income received and its interest expenses over the interest-earning assets, dropped 5 basis points to 3.22%. Signature’s trailing P/E ratio suggests that the stock is fairly valued at the moment (trailing P/E ratio of 22.76 for the shares of Signature versus 23.41 for the S&P 500). Clifford Fox’s Columbus Circle Investors cut its exposure to Signature Bank (NASDAQ:SBNY) during the third quarter by 121,541 shares, remaining with 46,305 shares.