Reputable billionaire investors such as Jim Simons, Cliff Asness 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.
Grupo Supervielle S.A. (NYSE:SUPV) has seen a decrease in hedge fund sentiment of late. SUPV was in 7 hedge funds’ portfolios at the end of the second quarter of 2019. There were 12 hedge funds in our database with SUPV holdings at the end of the previous quarter. Our calculations also showed that SUPV isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the recent hedge fund action regarding Grupo Supervielle S.A. (NYSE:SUPV).
How are hedge funds trading Grupo Supervielle S.A. (NYSE:SUPV)?
At Q2’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -42% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in SUPV a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Grupo Supervielle S.A. (NYSE:SUPV) was held by Kora Management, which reported holding $18.9 million worth of stock at the end of March. It was followed by Highland Capital Management with a $6.3 million position. Other investors bullish on the company included Odey Asset Management Group, Millennium Management, and LMR Partners.
Because Grupo Supervielle S.A. (NYSE:SUPV) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that slashed their entire stakes in the second quarter. Interestingly, Sander Gerber’s Hudson Bay Capital Management dropped the biggest investment of the 750 funds watched by Insider Monkey, valued at close to $5.2 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dropped about $1.5 million worth. These moves are interesting, as total hedge fund interest fell by 5 funds in the second quarter.
Let’s also examine hedge fund activity in other stocks similar to Grupo Supervielle S.A. (NYSE:SUPV). We will take a look at Foundation Building Materials, Inc. (NYSE:FBM), Bitauto Holdings Limited (NYSE:BITA), AngioDynamics, Inc. (NASDAQ:ANGO), and SunCoke Energy, Inc (NYSE:SXC). This group of stocks’ market values match SUPV’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $36 million in SUPV’s case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand Bitauto Holdings Limited (NYSE:BITA) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Grupo Supervielle S.A. (NYSE:SUPV) is even less popular than BITA. Hedge funds dodged a bullet by taking a bearish stance towards SUPV. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SUPV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SUPV investors were disappointed as the stock returned -59.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.