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.
In this article, we will take a closer look at Alere Inc (NYSE:ALR) and what smart money investors think about it. Overall, the number of long hedge fund positions inched up by three lately. At the end of this article we will also compare ALR to other stocks including Ritchie Bros. Auctioneers (USA) (NYSE:RBA), MAXIMUS, Inc. (NYSE:MMS), and WGL Holdings Inc (NYSE:WGL) to get a better sense of its popularity.
Follow Alere Inc. (NYSE:ALR)
Follow Alere Inc. (NYSE:ALR)
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.
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Keeping this in mind, we’re going to check out the recent action encompassing Alere Inc (NYSE:ALR).
Hedge fund activity in Alere Inc (NYSE:ALR)
At the end of the third quarter, a total of 44 funds tracked by Insider Monkey were bullish on this stock, up by 7% over the quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the most valuable position in Alere Inc (NYSE:ALR). Iridian Asset Management has a $216.6 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Thomas Steyer’s Farallon Capital holding a $100.1 million position; 1.5% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish encompass Ric Dillon’s Diamond Hill Capital, Carl Tiedemann and Michael Tiedemann’s TIG Advisors, and Matthew Halbower’s Pentwater Capital Management.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Empyrean Capital Partners, managed by Michael A. Price and Amos Meron, created the most valuable position in Alere Inc (NYSE:ALR). Empyrean Capital Partners had $10.8 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $10.2 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Solomon Kumin’s Folger Hill Asset Management, and Youlia Miteva’s Proxima Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Alere Inc (NYSE:ALR) but similarly valued. These stocks are Ritchie Bros. Auctioneers (USA) (NYSE:RBA), MAXIMUS, Inc. (NYSE:MMS), WGL Holdings Inc (NYSE:WGL), and Telecom Argentina S.A. (ADR) (NYSE:TEO). This group of stocks’ market caps resemble ALR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RBA | 16 | 183842 | 5 |
| MMS | 10 | 24520 | 1 |
| WGL | 13 | 81874 | 1 |
| TEO | 10 | 85073 | -1 |
As you can see these stocks had an average of 12 funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $1.10 billion in ALR’s case. Ritchie Bros. Auctioneers (USA) (NYSE:RBA) is the most popular stock in this table, while MAXIMUS, Inc. (NYSE:MMS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks, Alere Inc (NYSE:ALR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
