A number of stocks made headlines on Monday and are up to a great start of the week. In this article we will take a closer look at these stocks and will assess their popularity among over 730 hedge funds from our database in addition to looking at the developments that led to these stocks’ growth today. This analysis will allow investors to see if the smart money has a positive outlook on the performance of these companies over the long-term, rather than risking a chance to bet on a company whose stock was affected by an overreaction.
Over the last several years, hedge funds have been lagging the overall market due to their large size, which led to more risk aversion and forces them to invest the most capital in large- and mega-cap stocks, which are usually on everyone’s radar and price their growth faster and don’t have a lot of intrinsic value. Nevertheless, focusing on a particular type of hedge funds’ picks makes them the perfect investors to emulate. This type is the small-cap ideas of hedge funds, which, according to our backtests, can generate cumulative returns one percentage point above the market per month. Our strategy involves imitating top 15 small-cap picks among hedge funds and, since August 2012, it has returned around 118% and beat the S&P 500 ETF (SPY) by around 60 percentage points (read more details here).
With this in mind, let’s move to discussing the top gainers on Monday, starting with Medallion Financial Corp (NASDAQ:TAXI), whose stock surged by over 18% after the company was featured in a Barron’s article that said that the stock’s weak performance (it’s down by over 40% year-to-date) is an overreaction to the increasing impact of Uber, whose operations can affect the activity of usual yellow cabs in New York (Medallion provides lending to those who want to purchase a medallion required to operate a cab). However, analyst Alex Twerdahl of Sandler O’Neill has a ‘Buy’ rating on Medallion Financial Corp (NASDAQ:TAXI) with a target of $12, and was cited by the source as saying that Medallion Financial’s earnings have not been affected by the declining value of medallions.
Among the funds we track, 13 seem to have similar opinions to those expressed by Barron’s as they amassed positions worth $19.56 million position, representing nearly 10% of Medallion Financial Corp (NASDAQ:TAXI) at the end of June. Moreover, despite the stock’s negative performance, it attracted more attention from investors during the second quarter, as the number of funds with long positions went up by two and the total value of their holdings surged from $11.80 million at the end of March. Among them, Bernard Selz‘s Selz Capital is the largest shareholder, after initiating a new position that contains 700,000 shares as of the end of June. On the second spot is Mark Broach’s Manatuck Hill Partners, which upped its stake by 43% on the quarter to 500,000 shares.
Then there’s is Vascular Biogenics Ltd (NASDAQ:VBLT), which has advanced by almost 19% in the intraday trading on Monday on a volume of 2.56 million shares, versus an average of just 134,300 shares. The increase extended the stock’s gains in the last couple of days, which reached over 50% in the last four days. Investors are looking forward to Vascular Biogenics Ltd (NASDAQ:VBLT)’s presenting Phase 2 Data on VB-111, an anti-angiogenic agent for cancer therapy, at the European Cancer Conference that starts at the end of the week. Earlier today, JMP Securities upgraded the stock to ‘Outperform’ from ‘Market Perform’, which fueled today’s appreciation. However, due to Vascular Biogenics Ltd (NASDAQ:VBLT)’s small size, it’s not very popular among smart money investors and none of the funds from our database own shares of the company.
Finally, Starwood Waypoint Residential Trust (NYSE:SWAY)‘s stock appreciated by more than 12% on Monday, after the announcement that the firm will acquire another owner of single-family properties, Colony American Homes in an all-stock deal worth around $1.50 billion. Even though, Starwood Waypoint Residential Trust (NYSE:SWAY) is not very popular among the funds from our database, with only 17 reporting stakes in the last round of 13F filings, they are very bullish on the company, amassing almost 33% of its outstanding stock, holding stakes worth $269.34 million. However, these figures declined during the second quarter from 19 funds that held $392.05 million worth of Starwood Waypoint’s stock at the end of March. More specifically, Emanuel J. Friedman’s EJF Capital is the largest shareholder of the trust in our database, holding 3.62 million shares as of the end of June, followed closely by John Khoury’s Long Pond Capital, which disclosed 3.05 million shares in its latest 13F. By a wide margin, Ken Griffin‘s Citadel Investment Group, which owns 1.41 million shares of Starwood Waypoint Residential Trust (NYSE:SWAY), ranked on the third spot.
Disclosure: none
