Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
BSQUARE Corporation (NASDAQ:BSQR) was in 7 hedge funds’ portfolios at the end of September. BSQUARE Corporation (NASDAQ:BSQR) investors should be aware of an increase in enthusiasm from smart money recently. There were 4 hedge funds in our database with BSQUARE Corporation (NASDAQ:BSQR) positions at the end of the previous quarter. It is important to notice that the shares of BSQUARE Corporation (NASDAQ:BSQR) were down 2.51% during the third quarter. For a better understanding of hedge fund sentiment, we will discuss hedge funds that held positions in the company 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 Synalloy Corporation (NASDAQ:SYNL), Sphere 3D Corp. (NASDAQ:ANY), and Patriot Transportation Holding Inc (NASDAQ:PATI) to gather more data points.
If you’d ask most market participants, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at present, our experts look at the bigwigs of this group, approximately 700 funds. These hedge fund managers manage the majority of the hedge fund industry’s total asset base, and by monitoring their inimitable picks, Insider Monkey has uncovered several investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Keeping this in mind, let’s take a gander at the new action encompassing BSQUARE Corporation (NASDAQ:BSQR).
Hedge fund activity in BSQUARE Corporation (NASDAQ:BSQR)
Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 75% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies holds the number one position in BSQUARE Corporation (NASDAQ:BSQR). Renaissance Technologies has a $6.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second most bullish fund manager is Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, which holds a $1.5 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.
Consequently, key hedge funds have been driving this bullishness. Millennium Management initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are Citadel Investment Group, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BSQUARE Corporation (NASDAQ:BSQR) but similarly valued. We will take a look at Synalloy Corporation (NASDAQ:SYNL), Sphere 3D Corp. (NASDAQ:ANY), Patriot Transportation Holding Inc (NASDAQ:PATI), and Seventy Seven Energy Inc (NYSE:SSE). This group of stocks’ market caps resemble BSQUARE Corporation (NASDAQ:BSQR)’s market cap.
|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 6 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $9 million in BSQUARE Corporation (NASDAQ:BSQR)’s case. Seventy Seven Energy Inc (NYSE:SSE) is the most popular stock in this table. On the other hand, Synalloy Corporation (NASDAQ:SYNL) is the least popular one with only 4 bullish hedge fund positions. BSQUARE Corporation (NASDAQ:BSQR) 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, Seventy Seven Energy Inc (NYSE:SSE) might be a better candidate to consider a long position.