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.
Hedge fund interest in Vectren Corporation (NYSE:VVC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Life Storage Inc (NYSE:LSI), and Manhattan Associates, Inc. (NASDAQ:MANH) to gather more data points.
Follow Vectren Corp (NYSE:VVC)
Follow Vectren Corp (NYSE:VVC)
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With all of this in mind, let’s view the recent action encompassing Vectren Corporation (NYSE:VVC).
What does the smart money think about Vectren Corporation (NYSE:VVC)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the last quarter. Below, you can check out the change in hedge fund sentiment towards VVC over the last 5 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the biggest position in Vectren Corporation (NYSE:VVC). Renaissance Technologies has a $46.7 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $36.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Marshall Wace LLP. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically, a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was BlueCrest Capital Mgmt.).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Vectren Corporation (NYSE:VVC) but similarly valued. We will take a look at Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Life Storage Inc (NYSE:LSI), Manhattan Associates, Inc. (NASDAQ:MANH), and Graco Inc. (NYSE:GGG). All of these stocks’ market caps are closest to VVC’s market cap.
Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
---|---|---|---|
GOLD | 18 | 179620 | 0 |
LSI | 14 | 324991 | -8 |
MANH | 16 | 205073 | -5 |
GGG | 12 | 154364 | 1 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $122 million in VVC’s case. Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) is the most popular stock in this table. On the other hand Graco Inc. (NYSE:GGG) is the least popular one with only 12 bullish hedge fund positions. Vectren Corporation (NYSE:VVC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GOLD might be a better candidate to consider taking a long position in.
Disclosure: none