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.
HDFC Bank Limited (ADR) (NYSE:HDB) investors should pay attention to an increase in hedge fund sentiment of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Dow Chemical Company (NYSE:DOW), Thermo Fisher Scientific Inc. (NYSE:TMO), and Baidu.com, Inc. (ADR) (NASDAQ:BIDU) to gather more data points.
Follow H D F C Bank Ltd (NYSE:HDB)
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Now, we’re going to take a glance at the latest action surrounding HDFC Bank Limited (ADR) (NYSE:HDB).
What does the smart money think about HDFC Bank Limited (ADR) (NYSE:HDB)?
Heading into Q4, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in HDFC Bank Limited (ADR) (NYSE:HDB), worth close to $451.1 million, amounting to 0.9% of its total 13F portfolio. The second most bullish fund manager is Stephen Mandel of Lone Pine Capital, with a $326.8 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish comprise Ryan Pedlow’s Two Creeks Capital Management, Rob Citrone’s Discovery Capital Management and Robert Pohly’s Samlyn Capital.
As one would reasonably expect, some big names were breaking ground themselves. Emerging Sovereign Group, managed by J Kevin Kenny Jr, initiated the biggest position in HDFC Bank Limited (ADR) (NYSE:HDB). Emerging Sovereign Group had $5.2 million invested in the company at the end of the quarter. Charles Anderson’s Fox Point Capital Management also initiated a $3.1 million position during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks similar to HDFC Bank Limited (ADR) (NYSE:HDB). We will take a look at The Dow Chemical Company (NYSE:DOW), Thermo Fisher Scientific Inc. (NYSE:TMO), Baidu.com, Inc. (ADR) (NASDAQ:BIDU), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN). All of these stocks’ market caps resemble HDB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOW | 56 | 5591962 | -9 |
| TMO | 52 | 3831917 | -14 |
| BIDU | 52 | 3401399 | -18 |
| REGN | 32 | 1053183 | 3 |
As you can see these stocks had an average of 48 hedge funds with bullish positions and the average amount invested in these stocks was $3470 million. That figure was $1333 million in HDB’s case. The Dow Chemical Company (NYSE:DOW) is the most popular stock in this table. On the other hand Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks HDFC Bank Limited (ADR) (NYSE:HDB) is even less popular than REGN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
