Some stocks have been rallying particularly well today amid a general rally for the U.S market and we’ll take a look at what stands behind these surges as well as what hedge funds think of them in this article. The stocks under discussion in the following article are ITT Educational Services Inc. (NYSE:ESI), Atmel Corporation (NASDAQ:ATML), and Encana Corporation (NYSE:ECA).
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 118% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
Moving on to our first candidate, ITT Educational Services Inc. (NYSE:ESI) has seen its stock skyrocket by 27% so far today. ITT Educational Services, which provides postsecondary degree programs in the United States, has been successful in putting an end to the unlawful suspension imposed by the California State Approving Agency for Veterans Education (CSAAVE) on its approval of ITT Tech for enrollment by veteran students. On August 21, State Court Judge William D. Claster issued a tentative final ruling in ITT Tech’s favor that the suspension by CSAAVE was unlawful. At the same time, CSAAVE abandoned its attempt to suspend ITT Tech a few hours later, which will allow the for-profit technical institute to continue serving the educational needs of veterans. Phil Frohlich’s Prescott Group Capital Management initiated a 622,335 share-stake in ITT Educational Services during the second quarter, which makes it one of the largest equity holders in the company.