There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Fly Leasing Ltd (ADR) (NYSE:FLY) .
Fly Leasing Ltd (ADR) (NYSE:FLY) has experienced a decrease in hedge fund interest lately. FLY was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. There were 9 hedge funds in our database with FLY holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Audentes Therapeutics Inc (NASDAQ:BOLD), Beazer Homes USA, Inc. (NYSE:BZH), and Baldwin & Lyons Inc (NASDAQ:BWINB) to gather more data points.
Follow Fly Leasing Ltd (NYSE:FLY)
Follow Fly Leasing Ltd (NYSE:FLY)
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, let’s take a look at the recent action encompassing Fly Leasing Ltd (ADR) (NYSE:FLY).
Hedge fund activity in Fly Leasing Ltd (ADR) (NYSE:FLY)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in FLY over the last 5 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Hawkeye Capital, led by Richard Rubin, holds the number one position in Fly Leasing Ltd(ADR) (NYSE:FLY). Hawkeye Capital has a $20.3 million position in the stock, comprising 43.5% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, one of the largest hedge funds in the world, holding a $6.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions include Porter Collins, Daniel Moses, and Vincent Daniel’s Seawolf Capital, D. E. Shaw’s D E Shaw and Jim Simons’ Renaissance Technologies. 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.
Judging by the fact that Fly Leasing Ltd (ADR) (NYSE:FLY) has witnessed a declining sentiment from hedge fund managers, it’s easy to see that there were a few money managers that slashed their full holdings by the end of the third quarter. It’s worth mentioning that Joseph A. Jolson’s Harvest Capital Strategies dumped the largest investment of all the investors followed by Insider Monkey, totaling an estimated $0.8 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $0.3 million worth.
Let’s go over hedge fund activity in other stocks similar to Fly Leasing Ltd (ADR) (NYSE:FLY). We will take a look at Audentes Therapeutics Inc (NASDAQ:BOLD), Beazer Homes USA, Inc. (NYSE:BZH), Baldwin & Lyons Inc (NASDAQ:BWINB), and CECO Environmental Corp. (NASDAQ:CECE). This group of stocks’ market values are similar to FLY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOLD | 13 | 166773 | 13 |
| BZH | 15 | 87093 | 4 |
| BWINB | 7 | 61724 | 1 |
| CECE | 18 | 49106 | 6 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $91 million. That figure was $41 million in FLY’s case. CECO Environmental Corp. (NASDAQ:CECE) is the most popular stock in this table. On the other hand Baldwin & Lyons Inc (NASDAQ:BWINB) is the least popular one with only 7 bullish hedge fund positions. Fly Leasing Ltd (ADR) (NYSE:FLY) 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 CECE might be a better candidate to consider taking a long position in.
Disclosure: None
