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.
FBR & Co (NASDAQ:FBRC) was in 6 hedge funds’ portfolios at the end of September. FBRC shareholders have witnessed a decrease in hedge fund sentiment lately. There were 8 hedge funds in our database with FBRC positions at the end of the previous quarter. At the end of this article we will also compare FBRC to other stocks including Catalyst Pharmaceutical Partners, Inc. (NASDAQ:CPRX), Perion Network Ltd (NASDAQ:PERI), and SCYNEXIS Inc (NASDAQ:SCYX) 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.
With all of this in mind, let’s review the recent action regarding FBR & Co (NASDAQ:FBRC).
How are hedge funds trading FBR & Co (NASDAQ:FBRC)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FBRC over the last 5 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, PEAK6 Capital Management, led by Matthew Hulsizer, holds the largest position in FBR & Co (NASDAQ:FBRC). According to regulatory filings, the fund has a $4.7 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $1.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include D E Shaw, one of the biggest hedge funds in the world, Jim Simons’s Renaissance Technologies and Jeffrey E. Eberwein’s Lone Star Value Management. 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.