With the date of filing the 13F for the reporting period of April1-June 30 having concluded recently, we at Insider Monkey decided to closely examine the portfolio data released by over 700 hedge funds we cover and look for the best opportunities in it for our readers. Having already covered the large-cap stocks that are being hoarded by hedge funds, in this article we decided to elaborate on the four mid-cap stocks whose shares are being hoarded by hedge funds
But before that, 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, their 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 have beat the market by 65 percentage points, returning over 123% (read more details here).
4. Connecture Inc (NASDAQ:CNXR)
Investors with Long Positions (as of June 30): 9
Aggregate Value of Investors’ Holdings (as of June 30): $71.30 million
Although Connecture Inc (NASDAQ:CNXR) saw a slight quarter-over-quarter drop in popularity from 10 hedge funds that held stakes with an aggregate value of $85.48 million at the end of March, a significant portion or 31.10% of the company’s stock at the end of June was still owned by nine hedge funds from our database. The stock of the web-based platform provider for the health insurance distribution remained flat during the April-June period, but has gone through a correction since late-July. For the second quarter, the company reported a loss of $0.20 per share on revenue of $23.40 million versus a loss of $0.19 per share and revenue of $23.27 million expected by analysts. Jeffrey Jay and David Kroin‘s Great Point Partners was the largest shareholder of Connecture Inc (NASDAQ:CNXR) among the hedge funds covered by us, owning over 4.12 million shares, as of June 30.
3. Liberty Interactive Corp (NASDAQ:QVCA)
Investors with Long Positions (as of June 30): 71
Aggregate Value of Investors’ Holdings (as of June 30): $4.23 billion
At the end of June, investors from our database held 32.30% of Liberty Interactive Corp (NASDAQ:QVCA)’s outstanding stock, even though the number of funds with long positions declined by six during the second quarter. Even though hedge funds seem to have been reducing their holdings in the company, most analysts continue to remain bullish on it, including Brean Capital, which has recently reiterated its ‘Buy’ rating and a $37 price target on the stock. Among other investors, Barry Rosenstein‘s JANA Partners was one of the largest shareholders of Liberty Interactive Corp (NASDAQ:QVCA) at the end of second quarter, owning over 8 million shares of the company.
2. FleetCor Technologies, Inc. (NYSE:FLT)
Investors with Long Positions (as of June 30): 54
Aggregate Value of Investors’ Holdings (as of June 30): $5.28 billion
Payment solutions provider FleetCor Technologies, Inc. (NYSE:FLT) is one of the stocks that smart money have been bullish on. Even though the number of hedge funds with long positions went down from 56 at the end of March, the aggregate value of their investments increased from $5.00 billion. As of June 30, these 54 hedge funds held around 36.90% of the company’s outstanding stock. FleetCor Technologies, Inc. (NYSE:FLT) managed to beat the estimates for the second quarter, posting EPS of $1.48 and revenue of $404.60 million, compared to expectations of $1.46 in EPS and $403.25 million in revenue. One of the hedge funds that had a significant stake in the company was Stephen Mandel‘s Lone Pine Capital, which owned almost 5.48 million shares of FleetCor Technologies, Inc. (NYSE:FLT) at the end of June.
1. Ally Financial Inc (NYSE:ALLY)
Investors with Long Positions (as of June 30): 56
Aggregate Value of Investors’ Holdings (as of June 30): $4.38 billion
Surprisingly, Ally Financial Inc (NYSE:ALLY) turned out to be the numero uno mid-cap stock in our list, despite the fact that the number of investors with long positions declined by 11 and the aggregate value of their positions slumped by $600 million during the quarter. Nevertheless, the remaining investors that were long Ally Financial at the end of June, amassed more than 40% of its outstanding stock. After a drop in January, the stock of the bank holding company regained some of the lost ground during the second quarter and appreciated by 6.9%. On August 6, Deutsche Bank reiterated its ‘Buy’ rating on the stock, while upping their price target to $27 from $24, which represents a 24% upside to the stock’s current price. Though the stock was the most hoarded mid-cap at the end of the second quarter, activist investor Dan Loeb‘s Third Point reduced its stake in the company by 62% to 10 million shares during the same period.
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