Hedge Funds Were Heavily Buying These Small-Caps in Q2

#3 Pandora Media Inc (NYSE:P)

– Number of Hedge Fund Holders (as of June 30): 46
– Total Value of Hedge Fund Holdings (as of June 30): $1.29 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 45.30%

A net 11 funds added Pandora Media Inc (NYSE:P) to their equity portfolios in the second quarter, partly due to Pandora’s takeover prospects. On May 16, activist Keith Meister‘s Corvex Capital filed a 13D indicating that it established a 8.3% stake in Pandora. The fund later raised its stake to 9.9% and petitioned the FCC to allow it to buy another 5% of the company. Corvex wants Pandora to talk with investment banks about potentially selling itself, which Pandora subsequently did. On July 21, the Wall Street Journal reported that Liberty Media had in previous months offered to buy Pandora for around $15 per share. However, Pandora’s management rejected the offer for being $5 per share too low.

#2 Blue Buffalo Pet Products Inc (NASDAQ:BUFF)

– Number of Hedge Fund Holders (as of June 30): 26
– Total Value of Hedge Fund Holdings (as of June 30): $268.83 million
– Hedge Fund Holdings as Percent of Float (as of June 30): 5.90%

With the number of investors tracked by us with holdings in the stock rising by 14 quarter-over-quarter to 26 at the end of June, Blue Buffalo Pet Products Inc (NASDAQ:BUFF) is the second ‘most-added’ small-cap company on our list. Blue Buffalo Pet Products reported solid results for the second quarter, with EPS of $0.19 on revenue of $286.85 million, up by 45.2% and 12.9% year-over-year, respectively. For the full year, the company’s management expects EPS of $0.74 to $0.76 and sales of $1.14 billion to $1.15 billion.

#1 Southwestern Energy Company (NYSE:SWN)

– Number of Hedge Fund Holders (as of June 30): 48
– Total Value of Hedge Fund Holdings (as of June 30): $1.35 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 27.40%

A total of 48 funds from our database owned $1.35 billion of Southwestern Energy Company (NYSE:SWN)’s stock, which accounted for 27.40% of the float on June 30, versus 28 funds and $656.97 million, respectively, a quarter earlier. In June, Southwestern put much of its debt fears to rest by issuing 86 million shares in a secondary that raised gross proceeds of around $1.1 billion. Although the equity issuance increased the company’s float by around 25%, the public offering basically removes any debt maturity concerns for the next two years and helps Southwestern to avoid any forced asset sales. The offering will also help Southwestern Energy return to growth. Due to improved production efficiencies and more planned rigs made possible by the extra money raised, the company’s management raised their full 2016 production forecast by 5% to 865-875 Bcfe. Hedge funds expect Southwestern to outperform if natural gas prices keep rising. 

Disclosure: none