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.
A stock that has seen an increase in popularity lately is Methanex Corporation (USA) (NASDAQ:MEOH). During the third quarter, the number of funds tracked by Insider Monkey bullish on MEOH advanced by seven to 17. At the end of this article we will also compare MEOH to other stocks including Manchester United PLC (NYSE:MANU), Univar Inc (NYSE:UNVR), and Blackstone Mortgage Trust Inc (NYSE:BXMT) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s go over the latest action regarding Methanex Corporation (USA) (NASDAQ:MEOH).
How are hedge funds trading Methanex Corporation (USA) (NASDAQ:MEOH)?
Heading into the fourth quarter of 2016, a total of 17 of the hedge funds followed by Insider Monkey were bullish on Methanex Corporation, up by 70% over the quarter. The graph below displays the number of hedge funds with bullish position in MEOH over the last five quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Brian Ashford-Russell and Tim Woolley’s Polar Capital has the number one position in Methanex Corporation (USA) (NASDAQ:MEOH), worth close to $32.6 million, accounting for 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is Steve Cohen’s Point72 Asset Management, with a $14.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism comprise Steve Cohen’s Point72 Asia (Singapore), Neil Chriss’s Hutchin Hill Capital and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital. We should note that Point72 Asia (Singapore) is 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.
As industrywide interest jumped, key money managers have jumped into Methanex Corporation (USA) (NASDAQ:MEOH) headfirst. Point72 Asset Management assembled the most outsized position in Methanex Corporation (USA) (NASDAQ:MEOH). Other funds with brand new MEOH positions are Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Glenn Russell Dubin’s Highbridge Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s now review hedge fund activity in other stocks similar to Methanex Corporation (USA) (NASDAQ:MEOH). These stocks are Manchester United PLC (NYSE:MANU), Univar Inc (NYSE:UNVR), Blackstone Mortgage Trust Inc (NYSE:BXMT), and Ciena Corporation (NASDAQ:CIEN). This group of stocks’ market values resemble MEOH’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 18 funds with bullish positions and the average amount invested in these stocks was $275 million. That figure was $108 million in MEOH’s case. Univar Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only seven bullish hedge fund positions. Methanex Corporation (USA) (NASDAQ:MEOH) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Univar Inc (NYSE:UNVR) might be a better candidate to consider taking a long position in.