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 at all on some of these 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 their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
New Senior Investment Group Inc (NYSE:SNR) has seen a decrease in enthusiasm from smart money of late. SNR was in 17 hedge funds’ portfolios at the end of the third quarter of 2015. There were 27 hedge funds in our database with SNR holdings 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 Just Energy Group, Inc. Ordinary Shares (Canada) (NYSE:JE), HeartWare International Inc (NASDAQ:HTWR), and Golar LNG Partners LP (NASDAQ:GMLP) to gather more data points.
Follow New Senior Investment Group Inc.
Follow New Senior Investment Group Inc.
To most stock holders, hedge funds are perceived as slow, old financial vehicles of years past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the leaders of this group, about 700 funds. These money managers watch over most of the smart money’s total asset base, and by shadowing their inimitable stock picks, Insider Monkey has figured out a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, let’s review the key action encompassing New Senior Investment Group Inc (NYSE:SNR).
Hedge fund activity in New Senior Investment Group Inc (NYSE:SNR)
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 37% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Omega Advisors, managed by Leon Cooperman, holds the number one position in New Senior Investment Group Inc (NYSE:SNR), worth an estimated $59.2 million and comprising 1.2% of its 13F portfolio. The second most bullish fund manager is Levin Capital Strategies, led by John A. Levin, holding a $57.5 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise John Osterweis’s Osterweis Capital Management, Andy Redleaf’s Whitebox Advisors and Ken Griffin’s Citadel Investment Group.
Judging by the fact that New Senior Investment Group Inc (NYSE:SNR) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies that slashed their entire stakes last quarter. It’s worth mentioning that Jason Karp’s Tourbillon Capital Partners cut the largest stake of the 700 funds followed by Insider Monkey, comprising close to $6.7 million in stock. Nick Niell’s fund, Arrowgrass Capital Partners, also dumped its stock, about $6.6 million worth of SNR shares. These moves are important to note, as total hedge fund interest fell by 10 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as New Senior Investment Group Inc (NYSE:SNR) but similarly valued. We will take a look at Just Energy Group, Inc. Ordinary Shares (Canada) (NYSE:JE), HeartWare International Inc (NASDAQ:HTWR), Golar LNG Partners LP (NASDAQ:GMLP), and Rouse Properties Inc (NYSE:RSE). This group of stocks’ market caps match SNR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JE | 10 | 14062 | 3 |
| HTWR | 21 | 216329 | 6 |
| GMLP | 4 | 27198 | -3 |
| RSE | 11 | 90110 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $262 million in SNR’s case. HeartWare International Inc (NASDAQ:HTWR) is the most popular stock in this table. On the other hand Golar LNG Partners LP (NASDAQ:GMLP) is the least popular one with only 4 bullish hedge fund positions. New Senior Investment Group Inc (NYSE:SNR) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HTWR might be a better candidate to consider a long position.
