Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
McDermott International (NYSE:MDR) has experienced an increase in enthusiasm from smart money recently. There were 24 hedge funds in our database with MDR holdings at the end of the previous quarter. At the end of this article we will also compare MDR to other stocks including Seadrill Ltd (NYSE:SDRL), Inogen Inc (NASDAQ:INGN), and Teekay LNG Partners L.P. (NYSE:TGP) to get a better sense of its popularity.
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.
With all of this in mind, we’re going to view the new action surrounding McDermott International (NYSE:MDR).
How have hedgies been trading McDermott International (NYSE:MDR)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, up 4% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in MDR at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael Blitzer’s Kingstown Capital Management has the number one position in McDermott International (NYSE:MDR), worth close to $26.6 million, accounting for 3% of its total 13F portfolio. The second largest stake is held by Mark McGoldrick and Jason Maynard of Mount Kellett Capital Management, with a $22.2 million position; the fund has 27.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Israel Englander’s Millennium Management, Youlia Miteva’s Proxima Capital Management and D. E. Shaw’s D E Shaw. 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.