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 in 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.
Seadrill Partners LLC (NYSE:SDLP) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. At the end of this article we will also compare Seadrill Partners LLC to other stocks including Briggs & Stratton Corporation (NYSE:BGG), Orion Engineered Carbons SA (NYSE:OEC), and Ebix Inc (NASDAQ:EBIX) to get a better sense of its popularity.
To the average investor there are tons of methods stock market investors can use to appraise stocks. A couple of the best methods are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite investment managers can outpace the S&P 500 by a superb amount (see the details here).
With all of this in mind, we’re going to go over the latest action encompassing Seadrill Partners LLC (NYSE:SDLP).
How are hedge funds trading Seadrill Partners LLC (NYSE:SDLP)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or had already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in Seadrill Partners LLC (NYSE:SDLP), worth close to $1 million, comprising less than 0.1% of its total 13F portfolio. The second-most bullish fund manager is Prescott Group Capital Management, led by Phil Frohlich, holding a $0.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish include David Costen Haley’s HBK Investments, Michael Thompson’s BHR Capital, and George Hall’s Clinton Group.
Seeing as Seadrill Partners LLC (NYSE:SDLP) has faced a declination in interest from the smart money, logic holds that there lies a certain “tier” of money managers who were dropping their full holdings by the end of the third quarter. Interestingly, Daniel S. Och’s OZ Management dropped the biggest investment of the 700 funds monitored by Insider Monkey, worth about $1.8 million in stock, and Renaissance Technologies was right behind this move, as the fund said goodbye to about $1.3 million worth of shares. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Seadrill Partners LLC (NYSE:SDLP). These stocks are Briggs & Stratton Corporation (NYSE:BGG), Orion Engineered Carbons SA (NYSE:OEC), Ebix Inc (NASDAQ:EBIX), and EnPro Industries, Inc. (NYSE:NPO). All of these stocks’ market caps are closest to Seadrill Partners LLC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BGG | 20 | 148025 | 5 |
| OEC | 18 | 123687 | -3 |
| EBIX | 12 | 69282 | -2 |
| NPO | 19 | 225981 | -2 |
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $4 million in Seadrill Partners LLC’s case. Briggs & Stratton Corporation (NYSE:BGG) is the most popular stock in this table. On the other hand Ebix Inc (NASDAQ:EBIX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Seadrill Partners LLC (NYSE:SDLP) is even less popular than EBIX. Considering that hedge funds aren’t at all fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
