Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Morgans Hotel Group Co. (NASDAQ:MHGC) a buy, sell, or hold? The smart money is altogether taking an optimistic view. The number of long hedge fund bets that are revealed through the 13F filings inched up by 1 lately. There were 9 hedge funds in our database with MHGC holdings at the end of the previous quarter. At the end of this article we will also compare MHGC to other stocks including Bravo Brio Restaurant Group, Inc. (NASDAQ:BBRG), Key Technology, Inc. (NASDAQ:KTEC), and UCP Inc (NYSE:UCP) 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.
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With all of this in mind, let’s analyze the key action surrounding Morgans Hotel Group Co. (NASDAQ:MHGC).
How have hedgies been trading Morgans Hotel Group Co. (NASDAQ:MHGC)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2016. By comparison, 13 hedge funds held shares or bullish call options in MHGC heading into this year. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brian Taylor’s Pine River Capital Management has the number one position in Morgans Hotel Group Co. (NASDAQ:MHGC), worth close to $6.3 million. Coming in second is Gordy Holterman and Derek Dunn of Overland Advisors which holds a $2.5 million position. Remaining peers that are bullish comprise Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
