What Do Hedge Funds Think of PDC Energy Inc (PDCE)?

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.

PDC Energy Inc (NASDAQ:PDCE) was in 29 hedge funds’ portfolios at the end of the third quarter of 2015. PDCE shareholders have witnessed an increase in hedge fund sentiment of late. There were 27 hedge funds in our database with PDCE positions 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 Groupon Inc (NASDAQ:GRPN), J&J Snack Foods Corp. (NASDAQ:JJSF), and NRG Yield, Inc. Class C (NYSE:NYLD) to gather more data points.

Keeping this in mind, we’re going to review the new action encompassing PDC Energy Inc (NASDAQ:PDCE).

How have hedgies been trading PDC Energy Inc (NASDAQ:PDCE)?

Heading into Q4, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the second quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in PDC Energy Inc (NASDAQ:PDCE). Millennium Management has a $89.1 million position in the stock, comprising 0.2% of its 13F portfolio. On Millennium Management’s heels is Brenham Capital Management, led by John Labanowski, holding a $55.7 million position; the fund has 12% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish consist of Robert Polak’s Anchor Bolt Capital, Ken Griffin’s Citadel Investment Group and Vince Maddi and Shawn Brennan’s SIR Capital Management.

As industrywide interest jumped, some big names were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in PDC Energy Inc (NASDAQ:PDCE). Balyasny Asset Management had $12.5 million invested in the company at the end of the quarter. Nathaniel August’s Mangrove Partners also initiated a $8.2 million position during the quarter. The following funds were also among the new PDCE investors: Jacob Gottlieb’s Visium Asset Management, Lawrence Sapanski’s Scoria Capital, and Cliff Asness’ AQR Capital Management.

Let’s go over hedge fund activity in other stocks similar to PDC Energy Inc (NASDAQ:PDCE). We will take a look at Groupon Inc (NASDAQ:GRPN), J&J Snack Foods Corp. (NASDAQ:JJSF), NRG Yield, Inc. Class C (NYSE:NYLD), and Esterline Technologies Corporation (NYSE:ESL). This group of stocks’ market valuations are closest to PDCE’s market valuation.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $362 million in PDCE’s case. NRG Yield, Inc. Class C (NYSE:NYLD) is the most popular stock in this table. On the other hand J&J Snack Foods Corp. (NASDAQ:JJSF) is the least popular one with only 9 bullish hedge fund positions. PDC Energy Inc (NASDAQ:PDCE) 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 NYLD might be a better candidate to consider a long position.