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.
In this article, we are going to take a closer look at HENNESSY CAPITAL ACQUISITION CORP II (NASDAQ:HCAC), which registered a slight decline in popularity among smart money investors in our database last quarter. At the end of September 15 funds held shares of the company. At the end of this article we will also compare HCAC to other stocks including Ameresco Inc (NYSE:AMRC), Old Second Bancorp Inc. (NASDAQ:OSBC), and The Bancorp, Inc. (NASDAQ:TBBK) 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, we’re going to take a look at the recent action surrounding HENNESSY CAPITAL ACQUISITION CORP II (NASDAQ:HCAC).
What does the smart money think about HENNESSY CAPITAL ACQUISITION CORP II (NASDAQ:HCAC)?
At the end of September, 15 funds tracked by Insider Monkey were bullish on HCAC, down by one fund from the second quarter of 2016. On the other hand, there were a total of 19 hedge funds with a bullish position in HCAC at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Paul Glazer’s Glazer Capital, led by , holds the largest position in HENNESSY CAPITAL ACQUISITION CORP II (NASDAQ:HCAC). Glazer Capital has a $11.6 million position in the stock, comprising 2.3% of its 13F portfolio. The second largest stake is held by Neil Chriss’ Hutchin Hill Capital, with a $8.5 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism comprise Sander Gerber’s Hudson Bay Capital Management, Jeffrey Tannenbaum’s Fir Tree, and Andrew Weiss’ Weiss Asset Management. We should note that Hudson Bay 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.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dumped their positions entirely. It’s worth mentioning that Jacob Gottlieb’s Visium Asset Management dumped the largest investment of the 700 funds followed by Insider Monkey, totaling close to $2.3 million in stock, and Gordy Holterman and Derek Dunn’s Overland Advisors was right behind this move, as the fund dropped about $2.1 million worth of shares.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as HENNESSY CAPITAL ACQUISITION CORP II (NASDAQ:HCAC) but similarly valued. These stocks are Ameresco Inc (NYSE:AMRC), Old Second Bancorp Inc. (NASDAQ:OSBC), The Bancorp, Inc. (NASDAQ:TBBK), and Telenav Inc (NASDAQ:TNAV). This group of stocks’ market values match HCAC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of eight funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $46 million in HCAC’s case. The Bancorp, Inc. (NASDAQ:TBBK) is the most popular stock in this table, while Old Second Bancorp Inc. (NASDAQ:OSBC) is the least popular one with only four bullish hedge fund positions. Compared to these stocks HENNESSY CAPITAL ACQUISITION CORP II (NASDAQ:HCAC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.