Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
One stock that saw an increase in popularity among smart money investors in our database last quarter is Deckers Outdoor Corp (NASDAQ:DECK). A total of 17 funds held shares of the company at the end of September. At the end of this article we will also compare DECK to other stocks including Fortress Investment Group LLC (NYSE:FIG), Qunar Cayman Islands Ltd (NASDAQ:QUNR), and Abengoa Yield PLC (NASDAQ:ABY) 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.
Keeping this in mind, let’s go over the key action regarding Deckers Outdoor Corp (NASDAQ:DECK).
Hedge fund activity in Deckers Outdoor Corp (NASDAQ:DECK)
At the end of September, 17 of the hedge funds tracked by Insider Monkey were long this stock, up by two funds from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in DECK at the beginning of 2016. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Richard Mashaal’s Rima Senvest Management has the largest position in Deckers Outdoor Corp (NASDAQ:DECK), worth close to $83.6 million, amounting to 6% of its total 13F portfolio. The second most bullish fund is Willem Mesdag’s Red Mountain Capital holding a $62.8 million position; the fund has 19% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Chuck Royce’s Royce & Associates, Cliff Asness’ AQR Capital Management, and Steven Boyd’s Armistice Capital. 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.