Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
GigPeak Inc (NYSEMKT:GIG) was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. GIG investors should be aware of a decrease in hedge fund sentiment lately. There were 11 hedge funds in our database with GIG positions at the end of the second quarter. At the end of this article we will also compare GIG to other stocks including CAI International Inc (NYSE:CAI), A. H. Belo Corporation (NYSE:AHC), and Willis Lease Finance Corporation (NASDAQ:WLFC) to get a better sense of its popularity.
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 have hedgies been trading GigPeak Inc (NYSEMKT:GIG)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a 45% fall from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards GIG over the last 5 quarters, which had gradually improved until the Q3 plummet to a yearly low. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Soros Fund Management, founded by George Soros, holds the number one position in GigPeak Inc (NYSEMKT:GIG). Soros Fund Management has a $4.6 million position in the stock. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, with a $3.2 million position. Other peers that hold long positions contain Cliff Asness’ AQR Capital Management, Josh Goldberg’s G2 Investment Partners Management, and Israel Englander’s Millennium Management. We should note that Soros Fund Management is 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.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually sold off their positions entirely. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group sold off the largest position of the 700 funds watched by Insider Monkey, totaling an estimated $1.5 million in stock, and Paul Tudor Jones’ Tudor Investment Corp was right behind this move, as the fund cut about $1.4 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as GigPeak Inc (NYSEMKT:GIG) but similarly valued. We will take a look at CAI International Inc (NYSE:CAI), A. H. Belo Corporation (NYSE:AHC), Willis Lease Finance Corporation (NASDAQ:WLFC), and Ooma Inc (NYSE:OOMA). This group of stocks’ market valuations are similar to GIG’s market valuation.
|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 4 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was also $12 million in GIG’s case. CAI International Inc (NYSE:CAI) is the most popular stock in this table. On the other hand Willis Lease Finance Corporation (NASDAQ:WLFC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks GigPeak Inc (NYSEMKT:GIG) 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, though the recent fall in sentiment is worrisome and we’ll be watching the stock closely next quarter to see if it continues.