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: Clayton Williams Energy, Inc. (NASDAQ:CWEI) .
Is Clayton Williams Energy, Inc. (NASDAQ:CWEI) a superb stock to buy now? The best stock pickers are definitely taking a bullish view. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings improved by 3 in recent months. CWEI was in 13 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with CWEI holdings 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 NCI Building Systems, Inc. (NYSE:NCS), Stewart Information Services Corp (NYSE:STC), and ACCO Brands Corporation (NYSE:ACCO) to gather more data points.
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Hedge fund activity in Clayton Williams Energy, Inc. (NASDAQ:CWEI)
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 30% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CWEI over the last 5 quarters. So, let’s see 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, Millennium Management, one of the 10 largest hedge funds in the world, has the biggest position in Clayton Williams Energy, Inc. (NASDAQ:CWEI), worth close to $73.1 million. The second largest stake is held by Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk of GRT Capital Partners, with a $55.7 million position; the fund has 11.6% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain Todd J. Kantor’s Encompass Capital Advisors, Jeffrey Tannenbaum’s Fir Tree and Jim Simons’ Renaissance Technologies. We should note that two of these hedge funds (GRT Capital Partners and Encompass Capital Advisors) 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.
Consequently, specific money managers were breaking ground themselves. Renaissance Technologies created the most outsized position in Clayton Williams Energy, Inc. (NASDAQ:CWEI). Renaissance Technologies had $8.7 million invested in the company at the end of the quarter. Brian C. Freckmann’s Lyon Street Capital also made a $2.9 million investment in the stock during the quarter. The following funds were also among the new CWEI investors: Phil Frohlich’s Prescott Group Capital Management, Ken Griffin’s Citadel Investment Group, and John D. Gillespie’s Prospector Partners.
Let’s go over hedge fund activity in other stocks similar to Clayton Williams Energy, Inc. (NASDAQ:CWEI). These stocks are NCI Building Systems, Inc. (NYSE:NCS), Stewart Information Services Corp (NYSE:STC), ACCO Brands Corporation (NYSE:ACCO), and Seacor Holdings, Inc. (NYSE:CKH). This group of stocks’ market caps resemble CWEI’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 19 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $211 million in CWEI’s case. NCI Building Systems, Inc. (NYSE:NCS) is the most popular stock in this table. On the other hand Seacor Holdings, Inc. (NYSE:CKH) is the least popular one with only 12 bullish hedge fund positions. Clayton Williams Energy, Inc. (NASDAQ:CWEI) 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 NCS might be a better candidate to consider taking a long position in.