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 Amaya Inc (NASDAQ:AYA) a bargain? Money managers are getting more optimistic. The number of long hedge fund bets grew by 1 in recent months. AYA was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. There were 17 hedge funds in our database with AYA positions at the end of the previous quarter. At the end of this article we will also compare AYA to other stocks including Big Lots, Inc. (NYSE:BIG), Cathay General Bancorp (NASDAQ:CATY), and Media General, Inc. (NYSE:MEG) 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, we’re going to analyze the key action regarding Amaya Inc (NASDAQ:AYA).
How have hedgies been trading Amaya Inc (NASDAQ:AYA)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a rise of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AYA over the last 5 quarters. So, let’s check out 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, Crispin Odey’s Odey Asset Management Group, holds the largest position in Amaya Inc (NASDAQ:AYA). Odey Asset Management Group has a $163.9 million position in the stock, comprising 11.8% of its 13F portfolio. The second largest stake is held by Zach Schreiber’s Point State Capital, which holds a $139.1 million position; 1.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain Dinakar Singh’s TPG-AXON Management LP, David Einhorn’s Greenlight Capital and Jesse Ro’s Tiger Legatus Capital. 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.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Andrew Wallach and Jason Ader’s Cumberland Associates / Springowl Associates created the largest position in Amaya Inc (NASDAQ:AYA). Cumberland Associates / Springowl Associates had $22.5 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $1.7 million position during the quarter. The following funds were also among the new AYA investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to AMAYA INC (NASDAQ:AYA). These stocks are Big Lots, Inc. (NYSE:BIG), Cathay General Bancorp (NASDAQ:CATY), Media General, Inc. (NYSE:MEG), and J&J Snack Foods Corp. (NASDAQ:JJSF). This group of stocks’ market valuations resemble AYA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIG | 26 | 161909 | 0 |
| CATY | 12 | 38855 | 0 |
| MEG | 31 | 750847 | -3 |
| JJSF | 10 | 54617 | 1 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $252 million. That figure was $713 million in AYA’s case. Media General, Inc. (NYSE:MEG) is the most popular stock in this table. On the other hand J&J Snack Foods Corp. (NASDAQ:JJSF) is the least popular one with only 10 bullish hedge fund positions. Amaya Inc (NASDAQ:AYA) 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 MEG might be a better candidate to consider taking a long position in.
Disclosure: None
