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: American Public Education, Inc. (NASDAQ:APEI).
American Public Education, Inc. (NASDAQ:APEI) has experienced a decrease in enthusiasm from smart money recently. American Public Education, Inc. (NASDAQ:APEI) was in 10 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with American Public Education, Inc. (NASDAQ:APEI) 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 DXP Enterprises Inc (NASDAQ:DXPE), Varonis Systems Inc (NASDAQ:VRNS), and Casa Therapeutics Inc (NASDAQ:CARA) to gather more data points.
In today’s marketplace, there are numerous tools that stock traders employ to evaluate publicly traded companies. A pair of the most innovative tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can outpace the S&P 500 by a very impressive amount (see the details here).
With all of this in mind, we’re going to check out the key action regarding American Public Education, Inc. (NASDAQ:APEI).
How have hedgies been trading American Public Education, Inc. (NASDAQ:APEI)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 9% from the second quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Private Capital Management, managed by Gregg J. Powers, holds the largest position in American Public Education, Inc. (NASDAQ:APEI). Private Capital Management has a $13.5 million position in the stock, comprising 1.6% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds an $8.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Chuck Royce’s Royce & Associates, John Overdeck and David Siegel’s Two Sigma Advisors, and Neil Chriss’ Hutchin Hill Capital.
Seeing as American Public Education, Inc. (NASDAQ:APEI) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers that elected to cut their full holdings in the third quarter. Intriguingly, D E Shaw dumped the biggest investment of all the hedgies watched by Insider Monkey, worth an estimated $0.7 million in stock. Peter Muller’s fund, PDT Partners, also cut its stock, about $0.4 million worth of shares. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 fund in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as American Public Education, Inc. (NASDAQ:APEI) but similarly valued. These stocks are DXP Enterprises Inc (NASDAQ:DXPE), Varonis Systems Inc (NASDAQ:VRNS), Casa Therapeutics Inc (NASDAQ:CARA), and Agenus Inc (NASDAQ:AGEN). This group of stocks’ market valuations is similar to American Public Education, Inc. (NASDAQ:APEI)’s market valuation.
|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 11 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $32 million in American Public Education, Inc. (NASDAQ:APEI)’s case. Agenus Inc (NASDAQ:AGEN) is the most popular stock in this table. On the other hand, Varonis Systems Inc (NASDAQ:VRNS) is the least popular one with only 4 bullish hedge fund positions. American Public Education, Inc. (NASDAQ:APEI) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Agenus Inc (NASDAQ:AGEN) might be a better candidate to consider a long position.