Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
WL Ross Holding Corp (NASDAQ:NXEO) has experienced an increase in activity from the world’s largest hedge funds in recent months. There were 21 hedge funds in our database with NXEO holdings at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TIER REIT Inc (NYSE:TIER), Virtusa Corporation (NASDAQ:VRTU), and CEVA, Inc. (NASDAQ:CEVA) to gather more data points.
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.
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Now, let’s review the recent action regarding WL Ross Holding Corp (NASDAQ:NXEO).
What does the smart money think about WL Ross Holding Corp (NASDAQ:NXEO)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NXEO over the last 5 quarters. So, let’s check out 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, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC has the most valuable position in WL Ross Holding Corp (NASDAQ:NXEO), worth close to $167.9 million, accounting for 1.4% of its total 13F portfolio. Coming in second is Eli Cohen of Crescent Park Management, with a $4.6 million position; 0.8% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Jamie Mendola’s Pacific Grove Capital, Peter S. Park’s Park West Asset Management and Bart Baum’s Ionic Capital 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.
