Here is What Hedge Funds Think About Stamps.com Inc. (STMP)

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 Stamps.com Inc. (NASDAQ:STMP).

Stamps.com Inc. (NASDAQ:STMP) has seen an increase in support from the world’s most elite money managers of late. STMP was in 31 hedge funds’ portfolios at the end of the third quarter of 2016. There were 27 hedge funds in our database with STMP 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 Smith & Wesson Holding Corporation (NASDAQ:SWHC), Halyard Health Inc (NYSE:HYH), and HubSpot Inc (NYSE:HUBS) 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.

How are hedge funds trading Stamps.com Inc. (NASDAQ:STMP)?

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 15% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Park West Asset Management, managed by Peter S. Park, holds the number one position in Stamps.com Inc. (NASDAQ:STMP). Park West Asset Management has a $45.4 million position in the stock, comprising 4.1% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $44.5 million position. Some other professional money managers that hold long positions contain Josh Resnick’s Jericho Capital Asset Management, Principal Global Investors’ Columbus Circle Investors and Matthew A. Weatherbie’s Weatherbie Capital.

Consequently, key hedge funds were breaking ground themselves. Jericho Capital Asset Management, assembled the largest position in Stamps.com Inc. (NASDAQ:STMP). Jericho Capital Asset Management had $43.7 million invested in the company at the end of the quarter. Francis Cueto’s Asturias Capital also made a $15.3 million investment in the stock during the quarter. The following funds were also among the new STMP investors: Eduardo Costa’s Calixto Global Investors, Beeneet Kothari’s Tekne Capital Management, and Joseph A. Jolson’s Harvest Capital Strategies.

Let’s also examine hedge fund activity in other stocks similar to Stamps.com Inc. (NASDAQ:STMP). We will take a look at Smith & Wesson Holding Corporation (NASDAQ:SWHC), Halyard Health Inc (NYSE:HYH), HubSpot Inc (NYSE:HUBS), and Proto Labs Inc (NYSE:PRLB). This group of stocks’ market caps resemble STMP’s market cap.

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 $121 million. That figure was $415 million in STMP’s case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Proto Labs Inc (NYSE:PRLB) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Stamps.com Inc. (NASDAQ:STMP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None