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: AEP Industries (NASDAQ:AEPI).
Is AEP Industries (NASDAQ:AEPI) a great investment now? Money managers are in an optimistic mood. The number of bullish hedge fund bets that are revealed through the 13F filings advanced by 1 lately. 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 Tsakos Energy Navigation Ltd. (NYSE:TNP), Western Asst High Incm Opprtnty Fnd Inc. (NYSE:HIO), and Winmark Corporation (NASDAQ:WINA) 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.
Hedge fund activity in AEP Industries (NASDAQ:AEPI)
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 8% from the second quarter of 2016, which followed 2 volatile quarters of hedge fund ownership. By comparison, 12 hedge funds held shares or bullish call options in AEPI heading into this year. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, KSA Capital Management, led by Daniel Khoshaba, holds the number one position in AEP Industries (NASDAQ:AEPI). KSA Capital Management has a $71.2 million position in the stock, comprising 22.2% of its 13F portfolio. On KSA Capital Management’s heels is Renaissance Technologies, founded by Jim Simons, holding a $42 million position. Some other peers that hold long positions encompass Alec Litowitz and Ross Laser’s Magnetar Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that KSA Capital Management 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.