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 Hubbell Incorporated (NYSE:HUB.B) going to take off soon? Investors who are in the know are getting more bullish. The number of bullish hedge fund bets rose by 6 recently. At the end of this article we will also compare HUB to other stocks including NRG Energy Inc (NYSE:NRG), City National Corp (NYSE:CYN), and Starwood Property Trust, Inc. (NYSE:STWD) to get a better sense of its popularity.
Follow Hubbell Inc (NYSE:HUBB)
Follow Hubbell Inc (NYSE:HUBB)
If you’d ask most shareholders, hedge funds are viewed as slow, old investment tools of years past. While there are over 8000 funds trading at present, Our researchers choose to focus on the upper echelon of this group, around 700 funds. These hedge fund managers orchestrate most of the hedge fund industry’s total capital, and by watching their inimitable investments, Insider Monkey has determined various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s take a peek at the latest action encompassing Hubbell Incorporated (NYSE:HUB).
What does the smart money think about Hubbell Incorporated (NYSE:HUB.B)?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the largest position in Hubbell Incorporated (NYSE:HUB.B), worth close to $91.5 million, amounting to 0.5% of its total 13F portfolio. On Royce & Associates’s heels is Mason Capital Management, led by Kenneth Mario Garschina, holding a $68.9 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Ken Griffin’s Citadel Investment Group, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw.
As one would reasonably expect, key hedge funds were breaking ground themselves. Clinton Group, managed by George Hall, established the largest position in Hubbell Incorporated (NYSE:HUB.B). Clinton Group had $5.6 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $4.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, Ross Berman’s Green Owl Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hubbell Incorporated (NYSE:HUB.B) but similarly valued. These stocks are NRG Energy Inc (NYSE:NRG), City National Corp (NYSE:CYN), Starwood Property Trust, Inc. (NYSE:STWD), and Southwestern Energy Company (NYSE:SWN). This group of stocks’ market valuations are closest to HUB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NRG | 31 | 720128 | 0 |
| CYN | 21 | 405927 | 0 |
| STWD | 26 | 509315 | 1 |
| SWN | 38 | 569326 | 5 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $551 million. That figure was $540 million in HUB’s case. Southwestern Energy Company (NYSE:SWN) is the most popular stock in this table. On the other hand City National Corp (NYSE:CYN) is the least popular one with only 21 bullish hedge fund positions. Hubbell Incorporated (NYSE:HUB.B) 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 SWN might be a better candidate to consider a long position.
