The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Ascent Capital Group Inc (NASDAQ:ASCMA) from the perspective of those successful funds.
Ascent Capital Group Inc (NASDAQ:ASCMA) was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. ASCMA has experienced an increase in enthusiasm from smart money recently. There were 12 hedge funds in our database with ASCMA 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 Black Box Corporation (NASDAQ:BBOX), Era Group Inc (NYSE:ERA), and Magnachip Semiconductor Corp (NYSE:MX) 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.
What does the smart money think about Ascent Capital Group Inc (NASDAQ:ASCMA)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a 17% jump from one quarter earlier. There were a total of 10 hedge funds with a bullish position in ASCMA at the beginning of this year, with the number of positions having jumped by over 50% in the last 2 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ahmet Okumus’ Okumus Fund Management has the most valuable position in Ascent Capital Group Inc (NASDAQ:ASCMA), worth close to $29.9 million, accounting for 6.7% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $19.9 million position. Other members of the smart money that hold long positions include Jim Simons’ Renaissance Technologies, Scott Wallace’s Wallace Capital Management, and Francis Chou’s Chou Associates Management. 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.
As one would reasonably expect, key hedge funds were breaking ground themselves. AQR Capital Management, led by Cliff Asness, initiated the largest position in Ascent Capital Group Inc (NASDAQ:ASCMA). AQR Capital Management had $0.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.3 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ascent Capital Group Inc (NASDAQ:ASCMA) but similarly valued. These stocks are Black Box Corporation (NASDAQ:BBOX), Era Group Inc (NYSE:ERA), Magnachip Semiconductor Corp (NYSE:MX), and Pfenex Inc (NYSEMKT:PFNX). This group of stocks’ market values resemble ASCMA’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $100 million in ASCMA’s case. Magnachip Semiconductor Corp (NYSE:MX) is the most popular stock in this table. On the other hand Era Group Inc (NYSE:ERA) is the least popular one with only 7 bullish hedge fund positions. Ascent Capital Group Inc (NASDAQ:ASCMA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MX might be a better candidate to consider taking a long position in.