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.
Xoom Corp (NASDAQ:XOOM) has experienced an increase in activity from the world’s largest hedge funds of late. XOOM was in 15 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with XOOM positions at the end of the previous quarter. 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 Boston Private Financial Hldg Inc (NASDAQ:BPFH), Rush Enterprises, Inc. (NASDAQ:RUSHA), and 1st Source Corporation (NASDAQ:SRCE) to gather more data points.
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With all of this in mind, we’re going to take a glance at the recent action encompassing Xoom Corp (NASDAQ:XOOM).
Hedge fund activity in Xoom Corp (NASDAQ:XOOM)
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, John Orrico’s Water Island Capital has the number one position in Xoom Corp (NASDAQ:XOOM), worth close to $43.3 million, corresponding to 2.2% of its total 13F portfolio. The second largest stake is held by Ancient Art (Teton Capital), managed by Quincy Lee, which holds a $42.9 million position; 7.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish comprise Mario Cibelli’s Marathon Partners, Anand Parekh’s Alyeska Investment Group and Matthew Tewksbury’s Stevens Capital Management.
As industrywide interest jumped, specific money managers have been driving this bullishness. Water Island Capital, managed by John Orrico, created the biggest position in Xoom Corp (NASDAQ:XOOM). Water Island Capital had $43.3 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $12.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Mario Gabelli’s GAMCO Investors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Xoom Corp (NASDAQ:XOOM) but similarly valued. We will take a look at Boston Private Financial Hldg Inc (NASDAQ:BPFH), Rush Enterprises, Inc. (NASDAQ:RUSHA), 1st Source Corporation (NASDAQ:SRCE), and Neenah Paper, Inc. (NYSE:NP). This group of stocks’ market values are similar to XOOM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BPFH | 17 | 76075 | -3 |
| RUSHA | 11 | 25926 | -5 |
| SRCE | 5 | 6098 | 1 |
| NP | 10 | 108402 | 0 |
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $142 million in XOOM’s case. Boston Private Financial Hldg Inc (NASDAQ:BPFH) is the most popular stock in this table. On the other hand 1st Source Corporation (NASDAQ:SRCE) is the least popular one with only 5 bullish hedge fund positions. Xoom Corp (NASDAQ:XOOM) is not the most popular stock in this group, but hedge fund interest is still above average. This is a positive signal, which when taken in combination with the hedge funds’ position increases, makes XOOM worthy of a closer look.
