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.
Is Rowan Companies PLC (NYSE:RDC) a sound stock to buy now? The best stock pickers are becoming more confident. The number of long hedge fund bets inched up by 2 recently. 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 Cavium Inc (NASDAQ:CAVM), Washington Federal Inc. (NASDAQ:WAFD), and Pampa Energia S.A. (ADR) (NYSE:PAM) to gather more data points.
Follow Rowan Companies Plc (NYSE:RDC)
Follow Rowan Companies Plc (NYSE:RDC)
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How are hedge funds trading Rowan Companies PLC (NYSE:RDC)?
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 8% from the second quarter of 2016, though there are still fewer hedge fund positions than 2 quarters earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Blue Harbour Group, managed by Clifton S. Robbins, holds the number one position in Rowan Companies PLC (NYSE:RDC). Blue Harbour Group has a $151.5 million position in the stock, comprising 5.6% of its 13F portfolio. On Blue Harbour Group’s heels is Cliff Asness’ AQR Capital Management, with a $73 million position. Other hedge funds and institutional investors with similar optimism contain Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Jonathan Barrett and Paul Segal’s Luminus Management, and Joel Greenblatt’s Gotham Asset Management.
As industry-wide interest jumped, key hedge funds have jumped into Rowan Companies PLC (NYSE:RDC) headfirst. HBK Investments, managed by David Costen Haley, created the most outsized position in Rowan Companies PLC (NYSE:RDC). HBK Investments had $17.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated an $11.2 million position during the quarter. The other funds with new positions in the stock are Kenneth Tropin’s Graham Capital Management, David Keidan’s Buckingham Capital Management, and Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners.
Let’s go over hedge fund activity in other stocks similar to Rowan Companies PLC (NYSE:RDC). We will take a look at Cavium Inc (NASDAQ:CAVM), Washington Federal Inc. (NASDAQ:WAFD), Pampa Energia S.A. (ADR) (NYSE:PAM), and FS Investment Corporation (NYSE:FSIC). This group of stocks’ market valuations are similar to RDC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAVM | 24 | 346930 | 4 |
| WAFD | 13 | 32873 | 1 |
| PAM | 17 | 284757 | -1 |
| FSIC | 3 | 5370 | 0 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $413 million in RDC’s case. Cavium Inc (NASDAQ:CAVM) is the most popular stock in this table. On the other hand FS Investment Corporation (NYSE:FSIC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Rowan Companies PLC (NYSE:RDC) 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.
Disclosure: None
