Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Supreme Industries, Inc. (NYSEAMEX:STS).
Supreme Industries, Inc. (NYSEAMEX:STS) shareholders have witnessed an increase in support from the world’s most successful money managers of late. STS was in 9 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with STS holdings at the end of the previous quarter. At the end of this article we will also compare STS to other stocks including Renewable Energy Group Inc (NASDAQ:REGI), Lumos Networks Corp (NASDAQ:LMOS), and Acacia Research Corporation (NASDAQ:ACTG) 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 Supreme Industries, Inc. (NYSEAMEX:STS)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 50% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards STS over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the most valuable position in Supreme Industries, Inc. (NYSEAMEX:STS). Renaissance Technologies has a $9.3 million position in the stock. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $7.1 million position. Some other professional money managers that are bullish comprise Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Robert B. Gillam’s McKinley Capital Management and Peter Muller’s PDT Partners. 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-microcap stocks.
With a general bullishness amongst the heavyweights, key money managers have jumped into Supreme Industries, Inc. (NYSEAMEX:STS) headfirst. McKinley Capital Management, led by Robert B. Gillam, assembled the most valuable position in Supreme Industries, Inc. (NYSEAMEX:STS). McKinley Capital Management had $2.5 million invested in the company at the end of the quarter. Louis Navellier’s Navellier & Associates also initiated a $0.9 million position during the quarter. The other funds with brand new STS positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management.
Let’s check out hedge fund activity in other stocks similar to Supreme Industries, Inc. (NYSEAMEX:STS). These stocks are Renewable Energy Group Inc (NASDAQ:REGI), Lumos Networks Corp (NASDAQ:LMOS), Acacia Research Corporation (NASDAQ:ACTG), and pdvWireless Inc (NASDAQ:PDVW). This group of stocks’ market values are similar to STS’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 12 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $25 million in STS’s case. Renewable Energy Group Inc (NASDAQ:REGI) is the most popular stock in this table. On the other hand pdvWireless Inc (NASDAQ:PDVW) is the least popular one with only 5 bullish hedge fund positions. Supreme Industries, Inc. (NYSEAMEX:STS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard REGI might be a better candidate to consider taking a long position in.