World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Black Diamond Inc (NASDAQ:BDE) has experienced a decrease in hedge fund interest in recent months. At the end of this article, we will also compare Black Diamond Inc (NASDAQ:BDE) to other stocks, including China XD Plastics Co Ltd (NASDAQ:CXDC), Enzymotec Ltd (NASDAQ:ENZY), and Bonanza Creek Energy Inc (NYSE:BCEI) to get a better sense of its popularity.
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To the average investor, there are a lot of indicators that stock traders put to use to grade their holdings. Two of the most underrated indicators are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outpace the market by a healthy margin (see the details here).
With all of this in mind, we’re going to analyze the key action regarding Black Diamond Inc (NASDAQ:BDE).
What have hedge funds been doing with Black Diamond Inc (NASDAQ:BDE)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 33% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Black Diamond Inc (NASDAQ:BDE), worth close to $7.1 million, comprising less than 0.1% of its total 13F portfolio. The second most bullish fund manager is Lee Munder Capital Group, managed by Lee Munder, which holds a $6.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass Paul Solit’s Potomac Capital Management, Richard S. Meisenberg’s ACK Asset Management, and D E Shaw.
Since Black Diamond Inc (NASDAQ:BDE) has faced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds that decided to sell off their full holdings last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest stake of the 700 funds followed by Insider Monkey, totaling an estimated $1 million in stock. Ken Gray and Steve Walsh’s fund, Bryn Mawr Capital, also cut its stock, about $0.5 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest was cut by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Black Diamond Inc (NASDAQ:BDE). We will take a look at China XD Plastics Co Ltd (NASDAQ:CXDC), Enzymotec Ltd (NASDAQ:ENZY), Bonanza Creek Energy Inc (NYSE:BCEI), and Xerium Technologies, Inc. (NYSE:XRM). All of these stocks’ market caps resemble Black Diamond Inc (NASDAQ:BDE)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CXDC | 4 | 12822 | 1 |
| ENZY | 5 | 68203 | 0 |
| BCEI | 15 | 53754 | -3 |
| XRM | 9 | 33509 | -2 |
As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $24 million in Black Diamond Inc (NASDAQ:BDE)’s case. Bonanza Creek Energy Inc (NYSE:BCEI) is the most popular stock in this table. On the other hand, China XD Plastics Co Ltd (NASDAQ:CXDC) is the least popular one with only 4 bullish hedge fund positions. Black Diamond Inc (NASDAQ:BDE) 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 Bonanza Creek Energy Inc (NYSE:BCEI) might be a better candidate to consider a long position.
