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.
Is Baldwin & Lyons Inc (NASDAQ:BWINB) the right pick for your portfolio? Money managers are actually in an optimistic mood. The number of long hedge fund investments grew by 1 recently. There were 7 hedge funds in our database with BWINB positions at the end of September. At the end of this article we will also compare BWINB to other stocks including CECO Environmental Corp. (NASDAQ:CECE), Sonus Networks, Inc. (NASDAQ:SONS), and Exactech, Inc. (NASDAQ:EXAC) to get a better sense of its popularity.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
How are hedge funds trading Baldwin & Lyons Inc (NASDAQ:BWINB)?
Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 17% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in BWINB at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fairfax Financial Holdings, led by Prem Watsa, holds the most valuable position in Baldwin & Lyons Inc (NASDAQ:BWINB). Fairfax Financial Holdings has a $24.8 million position in the stock, comprising 2.2% of its 13F portfolio. On Fairfax Financial Holdings’s heels is Cove Street Capital, led by Jeffrey Bronchick, which holds a $15.7 million position; 1.7% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism consist of Renaissance Technologies, one of the largest hedge funds in the world, Chuck Royce’s Royce & Associates and Mark Travis’ Intrepid Capital Management. We should note that Intrepid Capital 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-microcap stocks.