Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Platform Specialty Products Corp (NYSE:PAH).
Is Platform Specialty Products Corp (NYSE:PAH) going to take off soon? Judging by the fact that the number of funds long the stock went up by 16 in the third quarter, it looks like investors are in a bullish mood. At the end of this article we will also compare PAH to other stocks including Silicon Laboratories (NASDAQ:SLAB), Hawaiian Holdings, Inc. (NASDAQ:HA), and Essent Group Ltd (NYSE:ESNT) 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 review the new action regarding Platform Specialty Products Corp (NYSE:PAH).
What have hedge funds been doing with Platform Specialty Products Corp (NYSE:PAH)?
During the third quarter, the number of funds tracked by Insider Monkey bullish on Platform Specialty Products surged by 94% to 33. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Bill Ackman’s Pershing Square has the biggest position in Platform Specialty Products Corp (NYSE:PAH), worth close to $346.6 million, comprising 6.4% of its total 13F portfolio. Sitting at the No. 2 spot is Keith Meister of Corvex Capital, with a $151.4 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Brian Bares’s Bares Capital Management, John Griffin’s Blue Ridge Capital and Larry Robbins’s Glenview 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.