Hedge Funds Reveal Latest Moves; Which Ones Should You Follow?

With the latest round of 13F filings gathering pace, hedge fund managers are busy preparing to deluge us with the contents of their portfolios, which powers our market-beating small-cap strategy. However, that hasn’t stopped some of them from making fresh moves on a handful of stocks in the meantime. These include a biotech stock, a car-parts manufacturer and a tech stock, as well as a provider of marine transportation services. Let’s take a look at the companies that have caught the attention of hedge funds and why.

Let’s first take a step back and analyze how tracking hedge funds can help an everyday investor. Through our research we discovered that a portfolio of the 15 most popular small-cap picks of hedge funds beat the S&P 500 Total Return Index by nearly a percentage point per month on average between 1999 and 2012. On the other hand the most popular large-cap picks of hedge funds underperformed the same index by seven basis points per month during the same period. This is likely a surprise to many investors, who think of small-caps as risky, unpredictable stocks and put more faith (and money) in large-cap stocks. In forward tests since August 2012 these top small-cap stocks beat the market by an impressive 53 percentage points, returning 102% (read the details here). Follow the smart money into only their best investment ideas all while avoiding their high fees.

Clint Carlson seems to have changed his mind about Ultratech, Inc. (NASDAQ:UTEK) and has started buying the stock again. According to a recent filing with the Securities and Exchange Commission, Carlson Capital has acquired a total of 33,028 shares at prices varying between $14.94 and $14.99 apiece, boosting its stake in the company to 3.28 million shares or 11.9% of the company’s common stock.

So far this year, Ultratech, Inc. (NASDAQ:UTEK) has shed 15% of its value and is currently trading at $15.79 per share. For the three months ending July 4, 2015, the company posted revenues of $45.9 million and earnings of $0.06 per share, up from a loss of $0.23 per share a year earlier. Hedge funds didn’t appear to be anticipating much improvement as the number of funds invested in the company fell to 11 by the end of the second quarter, from 13 at the end of March. However, they own 22% of the company’s common stock and their holdings were valued at $113 million at the end of June, up by 19% over the quarter. Phill Gross and Robert Atchinson are also bullish on Ultratech, Inc. (NASDAQ:UTEK), having boosted their stake by 10% during the second quarter. In its latest 13F filing, Adage Capital Management reported ownership of 703,726 shares of Ultratech.

Joseph Edelman, the manager of Perceptive Advisors, just can’t get enough of Aldeyra Therapeutics Inc (NASDAQ:ALDX). In his latest transaction, Edelman bought exactly 50,000 shares at an average price of $6.46, taking his stake to 1.19 million shares which account for 12.3% of the company’s outstanding stock.

Although it’s not a well-known company, Aldeyra Therapeutics Inc (NASDAQ:ALDX) can be found in the equity portfolios of seven hedge funds in our database as of June 30, up from four funds at the end of the first quarter. During the second quarter the value of their combined holdings rose by 160% as well, to $17.7 million, which accounts for nearly a quarter of Aldeyra’s common stock. Shares are currently trading at $6.95 apiece, down by 9.1% year-to-date. Aldeyra Therapeutics Inc (NASDAQ:ALDX) has not yet generated any revenues, as its first drug, NS2, is currently undergoing Phase IIa trials. Its next financial report is due November 9 and analysts are projecting a loss of $0.30 per share, down from $o.36 per share for the third quarter of 2014.

We’ll check out the latest hedge fund action on Scorpio Bulkers Inc (NYSE:SALT) and Dana Holding Corporation (NYSE:DAN) on the next page.

Always a busy man, Mario Gabelli has now turned his attention to Dana Holding Corporation (NYSE:DAN), a provider of sealing and thermal-management products for car makers. In a recent filing with the SEC, Gabelli and GAMCO Investors have disclosed an increase in their holding of the stock to 7.85 million shares or 5.14% of the total number of outstanding shares. The company recently published its 2015 third quarter financial results, which fell short of expectations. Revenues came in at $1.46 billion, down by 10% year-over-year, while earnings of $0.41 per diluted share missed estimates of $0.53 per share.

Hedge fund sentiment towards Dana Holding Corporation (NYSE:DAN) worsened a bit during the second quarter, with the number of funds holding the stock at 26, while the value of their holdings fell by 8.1% to $474 million. Richard S. Pzena is also betting big on the company, having increased his holding to 3.53 million shares according to Pzena Investment Management’s latest 13F filing. Chuck Royce, on the other hand, chose to reduce his exposure to Dana Holding Corporation (NYSE:DAN), trimming his stake by 7% to 2.92 million shares.

Michael Weinstock and Monarch Alternative Capital are fed up with the way they are treated by the management of Scorpio Bulkers Inc (NYSE:SALT) and are seeking to speed up plans to expand its Board of Directors. Monarch has also disclosed an increase in its holding of the stock to 39.8 million shares, which represent 11.57% of the company’s common stock, which makes it the largest shareholder. Weinstock has sent a letter to Scorpio Bulkers’ board nominating Kurt M. Cellar and James B. Nish for election at the Company’s 2016 annual shareholders’ meeting.

Scorpio Bulkers Inc (NYSE:SALT) has registered some wild swings so far this year and is currently down by 29% year-to-date and has lost 80% of its value since going public. The company is set to release its third quarter financial results on November 2, with analysts expecting revenues of $26.9 million and a loss of $0.06 per share. While not among their favorite stocks, hedge funds hold roughly 53% of Scorpio Bulkers’ common stock, their combined holdings valued at $275 million. The number of funds reporting long positions at the end of the first quarter rose to 22, from 19 at the end of March.

Disclosure: None