Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG).
Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG) has seen an increase in support from the world’s most successful money managers in recent months. CIG was in 13 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with CIG 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 Cantel Medical Corp. (NYSE:CMN), American Eagle Outfitters (NYSE:AEO), and Brookdale Senior Living, Inc. (NYSE:BKD) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How have hedgies been trading Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 63% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in CIG heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG), worth close to $16.2 million. Coming in second is AQR Capital Management, led by Cliff Asness, which holds a $5 million position. Some other members of the smart money with similar optimism include Jos Shaver’s Electron Capital Partners, Millennium Management, one of the 10 largest hedge funds in the world, and Randall Smith’s Alden Global Capital. We should note that Electron Capital Partners is 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.