There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Drew Industries, Inc. (NYSE:DW).
Is Drew Industries, Inc. (NYSE:DW) going to take off soon? Money managers are taking a bullish view. The number of long hedge fund positions inched up by 7 in recent months. 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 Joy Global Inc. (NYSE:JOY), WP Glimcher Inc (NYSE:WPG), and Interval Leisure Group, Inc. (NASDAQ:IILG) 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.
Now, let’s take a look at the latest action surrounding Drew Industries, Inc. (NYSE:DW).
What have hedge funds been doing with Drew Industries, Inc. (NYSE:DW)?
At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 32% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Drew Industries, Inc. (NYSE:DW). According to regulatory filings, the fund has a $62.3 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, with a $23.7 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Israel Englander’s Millennium Management, Ken Grossman and Glen Schneider’s SG Capital Management and Cliff Asness’s AQR Capital Management.
Consequently, some big names have jumped into Drew Industries, Inc. (NYSE:DW) headfirst. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the biggest position in Drew Industries, Inc. (NYSE:DW). The fund reportedly had $10.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2 million investment during the quarter. The other funds with brand new DW positions are Matthew Tewksbury’s Stevens Capital Management, David Costen Haley’s HBK Investments, and Neil Chriss’s Hutchin Hill Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Drew Industries, Inc. (NYSE:DW) but similarly valued. We will take a look at Joy Global Inc. (NYSE:JOY), WP Glimcher Inc (NYSE:WPG), Interval Leisure Group, Inc. (NASDAQ:IILG), and Shopify Inc (NYSE:SHOP). This group of stocks’ market values are similar to DW’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 21 hedge funds with bullish positions and the average amount invested in these stocks was $289 million. That figure was $171 million in DW’s case. Shopify Inc (NYSE:SHOP) is the most popular stock in this table. On the other hand WP Glimcher Inc (NYSE:WPG) is the least popular one with only 13 bullish hedge fund positions. Drew Industries, Inc. (NYSE:DW) 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 SHOP might be a better candidate to consider a long position.