The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Bel Fuse, Inc. (NASDAQ:BELFB) from the perspective of those successful funds.
Hedge fund interest in Bel Fuse, Inc. (NASDAQ:BELFB) shares was flat at the end of last quarter, with 8 hedge funds bullish on the company. This is usually a negative indicator. At the end of this article we will also compare BELFB to other stocks including Freshpet Inc (NASDAQ:FRPT), ChemoCentryx Inc (NASDAQ:CCXI), and Nutraceutical Int’l Corp. (NASDAQ:NUTR) 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.
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How have hedgies been trading Bel Fuse, Inc. (NASDAQ:BELFB)?
Heading into the fourth quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in BELFB over the last 5 quarters. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies which is one of the largest hedge funds in the world, has the most valuable position in Bel Fuse, Inc. (NASDAQ:BELFB), worth close to $7.8 million. The second largest stake is held by Bernard Horn of Polaris Capital Management, with a $2.3 million position. Remaining peers that hold long positions contain Israel Englander’s Millennium Management, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and Chuck Royce’s Royce & Associates. 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.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Prescott Group Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was PEAK6 Capital Management).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bel Fuse, Inc. (NASDAQ:BELFB) but similarly valued. We will take a look at Freshpet Inc (NASDAQ:FRPT), ChemoCentryx Inc (NASDAQ:CCXI), Nutraceutical Int’l Corp. (NASDAQ:NUTR), and Control4 Corp (NASDAQ:CTRL). All of these stocks’ market caps resemble BELFB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRPT | 6 | 14287 | 0 |
| CCXI | 11 | 60448 | -1 |
| NUTR | 4 | 24796 | -1 |
| CTRL | 12 | 39487 | 2 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $15 million in BELFB’s case. Control4 Corp (NASDAQ:CTRL) is the most popular stock in this table. On the other hand Nutraceutical Int’l Corp. (NASDAQ:NUTR) is the least popular one with only 4 bullish hedge fund positions. Bel Fuse, Inc. (NASDAQ:BELFB) 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 CTRL might be a better candidate to consider taking a long position in.
Disclosure: None
