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.
Bonanza Creek Energy Inc (NYSE:BCEI) has seen a decrease in support from the world’s most successful money managers lately. There were 12 hedge funds in our database with BCEI holdings at the end of the second quarter, 4 more than there were a quarter later. 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 hhgregg, Inc. (NYSE:HGG), Repros Therapeutics Inc (NASDAQ:RPRX), and Jason Industries Inc (NASDAQ:JASN) 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.
Hedge fund activity in Bonanza Creek Energy Inc (NYSE:BCEI)
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 33% tumble from one quarter earlier. There were a total of 12 hedge funds with a bullish position in BCEI at the beginning of this year, and sentiment was flat during the first half of 2016. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fir Tree has the number one position in Bonanza Creek Energy Inc (NYSE:BCEI), worth close to $2.1 million. The second most bullish fund manager is Debra Fine’s Fine Capital Partners, which holds a $1.2 million call position. Some other hedge funds and institutional investors that are bullish consist of Neil Chriss’ Hutchin Hill Capital, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.