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.
Gigamon Inc (NYSE:GIMO) was in 21 hedge funds’ portfolios at the end of September. GIMO shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 22 hedge funds in our database with GIMO 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 TeleTech Holdings, Inc. (NASDAQ:TTEC), Rovi Corporation (NASDAQ:ROVI), and CNOOC Limited (ADR) (NYSE:CEO) to gather more data points.
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What does the smart money think about Gigamon Inc (NYSE:GIMO)?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a fall of 5% from one quarter earlier, the third-straight quarter that hedge fund positions have trended down. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy 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, Alex Sacerdote’s Whale Rock Capital Management has the biggest position in Gigamon Inc (NYSE:GIMO), worth close to $47.8 million, amounting to 3.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, led by Jim Simons, holding a $43.3 million position. Other hedge funds and institutional investors that are bullish consist of Richard Driehaus’ Driehaus Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management.
Judging by the fact that Gigamon Inc (NYSE:GIMO) has faced bearish sentiment from hedge fund managers, it’s safe to say that there exists a select few funds that decided to sell off their entire stakes by the end of the third quarter. Interestingly, Anand Parekh’s Alyeska Investment Group said goodbye to the biggest investment of the “upper crust” of funds watched by Insider Monkey, valued at close to $14.1 million in stock. Mark Kingdon’s fund, Kingdon Capital, also dumped its stock, about $5 million worth. These moves are interesting, as total hedge fund interest fell by 1 fund by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Gigamon Inc (NYSE:GIMO). These stocks are TeleTech Holdings, Inc. (NASDAQ:TTEC), Rovi Corporation (NASDAQ:ROVI), CNOOC Limited (ADR) (NYSE:CEO), and OneBeacon Insurance Group, Ltd. (NYSE:OB). This group of stocks’ market values are similar to GIMO’s market value.
|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 7 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $228 million in GIMO’s case. OneBeacon Insurance Group, Ltd. (NYSE:OB) is the most popular stock in this table. On the other hand Rovi Corporation (NASDAQ:ROVI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Gigamon Inc (NYSE:GIMO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and have a lot more money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio.