Reputable billionaire investors such as Nelson Peltz 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 on 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 the fact they must notify authorities of the stocks they own each quarter. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Interface, Inc. (NASDAQ:TILE) was in 25 hedge funds’ portfolios at the end of the third quarter of 2015. Interface, Inc. has seen an increase in hedge fund sentiment lately. There were 21 hedge funds in our database with Interface, Inc. holdings at the end of the previous quarter. At the end of this article we will also compare Interface, Inc. to other stocks including Neustar Inc (NYSE:NSR), International Speedway Corporation (NASDAQ:ISCA), and Insulet Corporation (NASDAQ:PODD) to get a better sense of its popularity.
According to most traders, hedge funds are viewed as unimportant, outdated financial tools of the past. While there are over 8,000 funds in operation at the moment, we hone in on the masters of this group, about 700 funds. Most estimates calculate that this group of people orchestrate the majority of the hedge fund industry’s total asset base, and by paying attention to their matchless equity investments, Insider Monkey has unearthed several investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, we’re going to take a peek at the key action surrounding Interface, Inc. (NASDAQ:TILE).
What have hedge funds been doing with Interface, Inc. (NASDAQ:TILE)?
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, 19% greater than at the end of the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Columbus Circle Investors, managed by Clifford Fox, holds the most valuable position in Interface, Inc. (NASDAQ:TILE). Columbus Circle Investors has a $33.1 million position in the stock, comprising 0.3% of its 13F portfolio. The second-most bullish firm is mutual fund Royce & Associates, managed by Chuck Royce, which holds a $19.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Joel Greenblatt’s Gotham Asset Management, Israel Englander’s Millennium Management, and Renaissance Technologies.
As industrywide interest jumped, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Interface, Inc. (NASDAQ:TILE). Arrowstreet Capital had $1.8 million invested in the company at the end of the quarter. Israel Englander’s Catapult Capital Management also initiated a $0.7 million position during the quarter. The following funds were also among the new Interface, Inc. investors: Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Mike Vranos’ Ellington, and Benjamin A. Smith’s Laurion Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Interface, Inc. (NASDAQ:TILE). We will take a look at Neustar Inc (NYSE:NSR), International Speedway Corporation (NASDAQ:ISCA), Insulet Corporation (NASDAQ:PODD), and Carpenter Technology Corporation (NYSE:CRS). This group of stocks’ market valuations are similar to TILE’s market valuation.
|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 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $219 million in Interface, Inc.’s case. Neustar Inc (NYSE:NSR) is the most popular stock in this table. On the other hand International Speedway Corporation (NASDAQ:ISCA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Interface, Inc. (NASDAQ:TILE) is more popular among hedge funds. Considering that smart money is 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.