Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Bill Barrett Corporation (NYSE:BBG) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of September. 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 Cloud Peak Energy Inc. (NYSE:CLD), PennyMac Mortgage Investment Trust (NASDAQ:PMTS), and Tucows Inc. (USA) (NYSEAMEX:TCX) to gather more data points.
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Follow Bill Barrett Corp (NYSE:BBG)
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.
What have hedge funds been doing with Bill Barrett Corporation (NYSE:BBG)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, same as in the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in BBG heading into this year. So, let’s review 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, Ross Margolies’s Stelliam Investment Management has the largest position in Bill Barrett Corporation (NYSE:BBG), worth close to $36.1 million, amounting to 1.2% of its total 13F portfolio. On Stelliam Investment Management’s heels is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $11.4 million position. Other professional money managers that are bullish encompass Vince Maddi and Shawn Brennan’s SIR Capital Management, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners and Israel Englander’s Millennium Management. We should note that two of these hedge funds (SIR Capital Management and GRT Capital Partners) 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that dropped their entire stakes in the stock during the third quarter. Intriguingly, Brian C. Freckmann’s Lyon Street Capital dropped the biggest stake of all the hedgies studied by Insider Monkey, worth an estimated $1 million in stock. Richard Driehaus’ fund, Driehaus Capital, also cut its stock, about $0.5 million worth.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Bill Barrett Corporation (NYSE:BBG) but similarly valued. These stocks are Cloud Peak Energy Inc. (NYSE:CLD), PennyMac Mortgage Investment Trust (NASDAQ:PMTS), Tucows Inc. (USA) (NYSEAMEX:TCX), and Western Ast Clymr Infl Lkd Sc & Incm Fd (NYSE:WIA). This group of stocks’ market caps are similar to BBG’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 9 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $88 million in BBG’s case. Cloud Peak Energy Inc. (NYSE:CLD) is the most popular stock in this table. On the other hand Western Ast Clymr Infl Lkd Sc & Incm Fd (NYSE:WIA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Bill Barrett Corporation (NYSE:BBG) 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.