Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Pure Cycle Corporation (NASDAQ:PCYO) shareholders have witnessed an increase in support from the world’s most elite money managers recently. At the end of this article we will also compare PCYO to other stocks, including Energy Focus Inc (NASDAQ:EFOI), TRACON Pharmaceuticals Inc (NASDAQ:TCON), and Xenon Pharmaceuticals Inc (NASDAQ:XENE) to get a better sense of its popularity.
Follow Pure Cycle Corp (NASDAQ:PCYO)
Follow Pure Cycle Corp (NASDAQ:PCYO)
Today there are dozens of methods investors can use to appraise stocks. Two of the most useful methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best money managers can outpace the market by a significant amount (see the details here).
With all of this in mind, we’re going to take a peek at the key action regarding Pure Cycle Corporation (NASDAQ:PCYO).
What have hedge funds been doing with Pure Cycle Corporation (NASDAQ:PCYO)?
At the Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Pure Cycle Corporation (NASDAQ:PCYO). PAR Capital Management has a $29.6 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Trigran Investments, led by Douglas T. Granat, holding a $11.9 million position; 3.7% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions comprise Chuck Royce’s Royce & Associates, Benjamin J Taylor’s Sophrosyne Capital and Amy Minella’s Cardinal Capital.
As one would reasonably expect, some big names have been driving this bullishness. Potomac Capital Management, managed by Paul Solit, established the most valuable position in Pure Cycle Corporation (NASDAQ:PCYO). Potomac Capital Management had $0.5 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Pure Cycle Corporation (NASDAQ:PCYO). We will take a look at Energy Focus Inc (NASDAQ:EFOI), TRACON Pharmaceuticals Inc (NASDAQ:TCON), Xenon Pharmaceuticals Inc (NASDAQ:XENE), and Hugoton Royalty Trust (NYSE:HGT). This group of stocks’ market values resemble PCYO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EFOI | 6 | 2216 | 5 |
| TCON | 5 | 12671 | 0 |
| XENE | 8 | 21808 | -1 |
| HGT | 5 | 713 | -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 $9 million, which is significantly lower than the $51 million figure in PCYO’s case. Xenon Pharmaceuticals Inc (NASDAQ:XENE) is the most popular stock in this table. On the other hand TRACON Pharmaceuticals Inc (NASDAQ:TCON) is the least popular one with only 5 bullish hedge fund positions. Pure Cycle Corporation (NASDAQ:PCYO) 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 XENE might be a better candidate to consider a long position.