You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is Charles Schwab Corp (NYSE:SCHW) the right pick for your portfolio? The smart money is becoming more confident. The number of long hedge fund bets inched up by 2 in Q3. 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 Liberty Global Inc. (NASDAQ:LBTYA), The Blackstone Group L.P. (NYSE:BX), and Automatic Data Processing (NASDAQ:ADP) to gather more data points.
To most market participants, hedge funds are perceived as unimportant, outdated investment vehicles of years past. While there are greater than 8,000 funds with their doors open today, our researchers choose to focus on the aristocrats of this club, about 700 funds. These hedge fund managers watch over the majority of all hedge funds’ total asset base, and by tracking their finest stock picks, Insider Monkey has come up with a number of investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, we’re going to analyze the key action surrounding Charles Schwab Corp (NYSE:SCHW).
How are hedge funds trading Charles Schwab Corp (NYSE:SCHW)?
At Q3’s end, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 4% uptick from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (or had already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, John H. Scully’s SPO Advisory Corp has the largest position in Charles Schwab Corp (NYSE:SCHW), worth close to $579.3 million, amounting to 9.8% of its total 13F portfolio. The second-largest stake is held by Lone Pine Capital, led by Stephen Mandel, holding a $382.6 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Lou Simpson’s SQ Advisors, Patrick Degorce’s Theleme Partners, and Glenn Greenberg’s Brave Warrior Capital.