Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Andeavor (NYSE:ANDV) a safe investment now? Prominent investors are becoming less hopeful. The number of bullish hedge fund positions went down by 4 in recent months. Our calculations also showed that ANDV isn’t among the 30 most popular stocks among hedge funds. ANDV was in 40 hedge funds’ portfolios at the end of September. There were 44 hedge funds in our database with ANDV holdings at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to review the latest hedge fund action regarding Andeavor (NYSE:ANDV).
Hedge fund activity in Andeavor (NYSE:ANDV)
At Q3’s end, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in ANDV over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Andeavor (NYSE:ANDV) was held by Millennium Management, which reported holding $1106.1 million worth of stock at the end of September. It was followed by Carlson Capital with a $347.8 million position. Other investors bullish on the company included Steadfast Capital Management, Adage Capital Management, and Alpine Associates.
Because Andeavor (NYSE:ANDV) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds who sold off their full holdings by the end of the third quarter. It’s worth mentioning that Thomas Steyer’s Farallon Capital said goodbye to the largest position of all the hedgies monitored by Insider Monkey, totaling about $80 million in stock. Nick Niell’s fund, Arrowgrass Capital Partners, also said goodbye to its stock, about $54.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Andeavor (NYSE:ANDV) but similarly valued. These stocks are Digital Realty Trust, Inc. (NYSE:DLR), Rockwell Collins, Inc. (NYSE:ROK), Rockwell Collins, Inc. (NYSE:COL), and Synchrony Financial (NYSE:SYF). This group of stocks’ market caps are similar to ANDV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DLR | 34 | 536443 | 14 |
| ROK | 28 | 633854 | -2 |
| COL | 48 | 4141035 | 9 |
| SYF | 35 | 2206905 | 5 |
| Average | 36.25 | 1879559 | 6.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $1.88 billion. That figure was $2.95 billion in ANDV’s case. Rockwell Collins, Inc. (NYSE:COL) is the most popular stock in this table. On the other hand Rockwell Automation Inc. (NYSE:ROK) is the least popular one with only 28 bullish hedge fund positions. Andeavor (NYSE:ANDV) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard COL might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
