Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Are Hoarding Shares of These 5 Smid-caps

While mega-caps and large-caps tend to offer predictability and stability, two attributes that are very valuable in a market as volatile as the one we’ve seen in recent months, they are also more likely to have limited upside potential. On the other hand, smaller companies, like smid-caps, are more likely to be undervalued or have high growth capability, and thus can represent interesting opportunities for retail investors; it’s all about picking the right stock. While individual investors don’t have the time or resources to find these stocks that are bound to outperform the market, institutional investors do and our research has shown that their top small-cap picks can greatly outperform the market (see more details here). So in this article, we will take a look at five smid-cap stocks that are especially popular among the funds that we track, in order to provide readers with a few ideas that could help them achieve superior returns.

Let’s start with the most popular smid-cap stock in this list: Cheniere Energy, Inc. (NYSEMKT:LNG). Despite a 12.9% reduction in the number of funds long the stock over the fourth quarter, the $7.75 billion market cap company counted 54 supporters in our database as of December 31. The value of their holdings amounted to $5.83 billion, down from $7.12 billion in the previous quarter. In spite of the tumble, these positions accounted for approximately 66.3% of the company’s outstanding stock. The largest stake at the end of 2015 was held by Carl Icahn’s Icahn Capital LP, which disclosed ownership of 32.68 million shares valued at more than $1.2 billion. However, on January 8, Seth Klarman’s Baupost Group declared a large increase to its exposure to the company, to 37.08 million shares on January 8 from 26.08 million shares held on December 31.

While shares of Cheniere Energy, Inc. (NYSEMKT:LNG) are down by more than 4% year-to-date, most of the losses were registered during January. Over the past month the shares have gained 46%, accompanying the wider rebound in the energy sector, in spite of the earnings miss that it posted and the resignation of its co-founder and former CEO Charif Souki from the company’s board. A few days ago, analysts at JP Morgan initiated coverage of the stock with an ‘Overweight’ rating and $54 price target.

Follow Cheniere Energy Inc. (NYSEMKT:LNG)
Trade (NYSEMKT:LNG) Now!

OneMain Holdings Inc (NYSE:OMF), formerly Springleaf Holdings, is a $3 billion responsible loan products provider that counted 28 supporters among the investors that we track, with them owning 61.2% of the company’s total shares by the end of the fourth quarter. Michael Novogratz’s Fortress Investment Group disclosed ownership of 77.44 million shares worth more than $3.05 billion at the end of 2015, making it by far the largest shareholder of record in the company.

A few weeks ago, OneMain Holdings Inc (NYSE:OMF) posted fourth quarter earnings of $0.77 per share, $0.24 above the Street’s consensus, and net interest income of $469 million, up by 83.1% year-over-year, and $27.65 million ahead of estimates. Following the earnings call, Barclays initiated coverage on the stock with an ‘Overweight’ rating and $35.00 price target, while FBR Capital reiterated an ‘Outperform’ rating, but lowered its price target to $40.00 from $65.00. Shares are currently trading below $24.00.

Follow Onemain Holdings Inc. (NYSE:OMF)
Trade (NYSE:OMF) Now!

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.