How Hedge Funds Are Trading Forest City Enterprises, Inc. (FCE)

Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually, their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Forest City Enterprises, Inc. (NYSE:FCE).

Forest City Enterprises, Inc. (NYSE:FCE) investors should be aware of a decrease in enthusiasm from smart money of late. FCE was in 37 hedge funds’ portfolios at the end of September. There were 38 hedge funds in our database with FCE holdings at the end of the previous quarter. At the end of this article we will also compare FCE to other stocks, including Old Dominion Freight Line (NASDAQ:ODFL), Flowers Foods, Inc. (NYSE:FLO), and Anacor Pharmaceuticals Inc (NASDAQ:ANAC) to get a better sense of its popularity.

To most investors, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation today, Our researchers hone in on the crème de la crème of this club, about 700 funds. These money managers control the lion’s share of all hedge funds’ total capital, and by paying attention to their matchless investments, Insider Monkey has deciphered many investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to take a gander at the new action regarding Forest City Enterprises, Inc. (NYSE:FCE).

How are hedge funds trading Forest City Enterprises, Inc. (NYSE:FCE)?

Heading into Q4, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the number one position in Forest City Enterprises, Inc. (NYSE:FCE). Scopia Capital has a $327.8 million position in the stock, comprising 7% of its 13F portfolio. The second most bullish fund manager is John Khoury of Long Pond Capital, with a $218.8 million position; the fund has 9.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Martin Whitman’s Third Avenue Management, John A. Levin’s Levin Capital Strategies and Ricky Sandler’s Eminence Capital.