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Two Hedge Funds are Bullish on WidePoint Corporation (WYY) and KB Home (KBH)

In a new filing with the U.S. Securities and Exchange Commission, Nokomis Capital, led by Brett Hendrickson, disclosed that it had increased its stake in WidePoint Corporation (NYSEMKT:WYY) to over 10% of the company. In another filing, Balyasny Asset Management, led by Dmitry Balyasny, reported boosting its position in California-based home builder KB Home (NYSE:KBH).

Nokomis Capital raised its position in WidePoint Corporation (NYSEMKT:WYY) to 12.77 million shares from 8.77 million shares reported previously. The stake is passive by nature, and represents 15.5% of the company’s common stock. Balyasny Asset Management seems to be a big fan of KB Home (NYSE:KBH), as it has massively increased its passive stake to 5.04 million shares from 585,273 shares reported as of the end of the second quarter. The stake is equal to 5.48% of KB Home (NYSE:KBH)’s outstanding common stock.

Dmitry Balyasny

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by around 60 percentage points (118% return vs. S&P 500’s 58% gain) over the last 37 months (see more details here).

Nokomis Capital is Texas-based long/short hedge fund, which was launched by Brett Hendrickson in 2008 at the height of the recession. Nokomis Capital likes to invest mainly in technology stocks, which amassed over 50% of the fund’s equity portfolio. At the end of June, the fund’s top holdings were represented by Telenav Inc (NASDAQ:TNAV), Kirkland’s, Inc. (NASDAQ:KIRK), and Penn Virginia Corporation (NYSE:PVA).

Brett Hendrickson
Brett Hendrickson
Nokomis Capital

WidePoint Corporation (NYSEMKT:WYY) is a $73.3-million market cap provider of managed mobility services, telecom lifecycle management, and cybersecurity solutions. The financial situation of the company does not look impressive as it posted a loss of about $1.4 million for the second quarter, up from a loss of around $0.7 million in the same quarter last year. However, WidePoint managed to increase its quarterly revenue by an annual 41% to $17.4 million. Shares of WidePoint Corporation (NYSEMKT:WYY) have dropped by 30.37% year-to-date. Among the largest shareholders of the company is Jeffrey Moskowitz’s Harvey Partners, which held 750,000 shares as of June 30.

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