You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is American Public Education, Inc. (NASDAQ:APEI) an excellent investment today? Investors who are in the know are selling. The number of long hedge fund positions went down by 2 recently. Our calculations also showed that APEI isn’t among the 30 most popular stocks among hedge funds. APEI was in 13 hedge funds’ portfolios at the end of the third quarter of 2018. There were 15 hedge funds in our database with APEI holdings at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a look at the latest hedge fund action surrounding American Public Education, Inc. (NASDAQ:APEI).
Hedge fund activity in American Public Education, Inc. (NASDAQ:APEI)
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards APEI over the last 13 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in American Public Education, Inc. (NASDAQ:APEI), which was worth $44.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $16.4 million worth of shares. Moreover, GLG Partners, D E Shaw, and Citadel Investment Group were also bullish on American Public Education, Inc. (NASDAQ:APEI), allocating a large percentage of their portfolios to this stock.
Because American Public Education, Inc. (NASDAQ:APEI) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there were a few hedge funds that elected to cut their positions entirely in the third quarter. Interestingly, Josh Goldberg’s G2 Investment Partners Management sold off the largest position of the “upper crust” of funds watched by Insider Monkey, worth about $1.3 million in stock. Thomas Bailard’s fund, Bailard Inc, also dropped its stock, about $0.7 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as American Public Education, Inc. (NASDAQ:APEI) but similarly valued. We will take a look at Ladenburg Thalmann Financial Services (NYSEAMEX:LTS), Container Store Group Inc (NYSE:TCS), eHealth, Inc. (NASDAQ:EHTH), and Nuveen New Jersey Quality Municipal Income Fund (NYSE:NXJ). This group of stocks’ market values are similar to APEI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LTS | 6 | 2437 | 0 |
| TCS | 14 | 33610 | 3 |
| EHTH | 19 | 213063 | 6 |
| NXJ | 2 | 1233 | -1 |
| Average | 10.25 | 62586 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $93 million in APEI’s case. eHealth, Inc. (NASDAQ:EHTH) is the most popular stock in this table. On the other hand Nuveen New Jersey Quality Municipal Income Fund (NYSE:NXJ) is the least popular one with only 2 bullish hedge fund positions. American Public Education, Inc. (NASDAQ:APEI) 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 EHTH might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
