At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Gain Capital Holdings Inc (NYSE:GCAP) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare GCAP to other stocks including Boot Barn Holdings Inc (NYSE:BOOT), Edge Therapeutics Inc (NASDAQ:EDGE), and Big 5 Sporting Goods Corporation (NASDAQ:BGFV) to get a better sense of its popularity.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
With all of this in mind, let’s analyze the fresh action surrounding Gain Capital Holdings Inc (NYSE:GCAP).
What does the smart money think about Gain Capital Holdings Inc (NYSE:GCAP)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, same as that of the last quarter. Below, you can check out the change in hedge fund sentiment towards GCAP over the last 5 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Rima Senvest Management, led by Richard Mashaal, holds the number one position in Gain Capital Holdings Inc (NYSE:GCAP). Rima Senvest Management has a $29.2 million position in the stock, comprising 2.1% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, a mutual fund led by Chuck Royce, which holds a $4.7 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism include Renaissance Technologies, one of the largest hedge funds in the world, D. E. Shaw’s D E Shaw and Jeffrey Bronchick’s Cove Street Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.