Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Stantec Inc. (USA) (NYSE:STN), which is a provider of professional services in the area of infrastructure and facilities for clients in the public and private sectors, an exceptional investment today? Hedge funds are indeed getting less optimistic. The number of bullish hedge fund bets contracted by 2 recently. STN was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 8 hedge funds in our database with STN positions at the end of the previous quarter. At the end of this article we will also compare STN to other stocks including Louisiana-Pacific Corporation (NYSE:LPX), CNO Financial Group Inc (NYSE:CNO), and UniFirst Corp (NYSE:UNF) 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.
How have hedgies been trading Stantec Inc. (USA) (NYSE:STN)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 25% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in STN heading into 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daniel Bubis’ Tetrem Capital Management has the biggest position in Stantec Inc. (USA) (NYSE:STN), worth close to $11.1 million. Sitting at the No. 2 spot is D E Shaw, one of the biggest hedge funds in the world, which holds a $5 million position. Some other professional money managers that hold long positions contain Jim Simons’ Renaissance Technologies, Eric Sprott’s Sprott Asset Management and Francois Rochon’s Giverny Capital. We should note that Sprott Asset 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.