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 Luxfer Holdings PLC (ADR) (NYSE:LXFR) .
Is Luxfer Holdings PLC (ADR) (NYSE:LXFR) a buy, sell, or hold? The smart money is actually becoming more confident. The number of bullish hedge fund bets that are revealed through the 13F filings increased by 2 lately. There were 10 hedge funds in our database with LXFR holdings at the end of the previous quarter. At the end of this article we will also compare LXFR to other stocks including FRP Holdings Inc (NASDAQ:FRPH), Davids Tea Inc (NASDAQ:DTEA), and Silicom Ltd. (NASDAQ:SILC) 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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Now, let’s take a gander at the new action encompassing Luxfer Holdings PLC (ADR) (NYSE:LXFR).
What have hedge funds been doing with Luxfer Holdings PLC (ADR) (NYSE:LXFR)?
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, growth of 20% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in LXFR at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Eric Edidin and Josh Lobel’s Archer Capital Management has the most valuable position in Luxfer Holdings PLC (ADR) (NYSE:LXFR), worth close to $27.8 million, accounting for 7% of its total 13F portfolio. The second largest stake is held by Thomas E. Claugus of GMT Capital which holds a $17.5 million position. Other hedge funds and institutional investors that hold long positions comprise Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Jonathan Savitz’s Greywolf Capital Management and Matthew Barrett’s Glendon Capital Management. We should note that two of these hedge funds (Archer Capital Management and Nantahala Capital Management) 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.
As industrywide interest jumped, specific money managers have been driving this bullishness. Robert B. Gillam of McKinley Capital Management assembled the biggest position in Luxfer Holdings PLC (ADR) (NYSE:LXFR). McKinley Capital Management had $1.1 million invested in the company at the end of the quarter. James Dondero’s Highland Capital Management also made a $0.3 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Luxfer Holdings PLC (ADR) (NYSE:LXFR) but similarly valued. These stocks are FRP Holdings Inc (NASDAQ:FRPH), Davids Tea Inc (NASDAQ:DTEA), Silicom Ltd. (NASDAQ:SILC), and EXCO Resources Inc (NYSE:XCO). This group of stocks’ market caps are similar to LXFR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRPH | 6 | 39702 | 1 |
| DTEA | 4 | 4882 | 4 |
| SILC | 4 | 6211 | 4 |
| XCO | 11 | 130821 | 2 |
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $86 million in LXFR’s case. EXCO Resources Inc (NYSE:XCO) is the most popular stock in this table. On the other hand Davids Tea Inc (NASDAQ:DTEA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Luxfer Holdings PLC (ADR) (NYSE:LXFR) 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.
Disclosure: None
