Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze International Speedway Corp (NASDAQ:ISCA) from the perspective of those successful funds.
International Speedway Corp (NASDAQ:ISCA) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was flat. The stock was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare ISCA to other stocks including Premier Inc (NASDAQ:PINC), Depomed Inc (NASDAQ:DEPO), and AMN Healthcare Services, Inc. (NYSE:AHS) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
Keeping this in mind, let’s review the key action surrounding International Speedway Corp (NASDAQ:ISCA).
Hedge fund activity in International Speedway Corp (NASDAQ:ISCA)
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in ISCA heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, John W. Rogers’s Ariel Investments has the biggest position in International Speedway Corp (NASDAQ:ISCA), worth close to $128.3 million, amounting to 1.6% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, holding a $15.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism contain D. E. Shaw’s D E Shaw, Peter S. Park’s Park West Asset Management and Jack Ripsteen’s Potrero Capital Research. We should note that Potrero Capital Research is 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.
Seeing as International Speedway Corp (NASDAQ:ISCA) has faced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their entire stakes heading into Q4. Interestingly, Gary Claar’s Claar Advisors dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $2.4 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund dropped about $0.7 million worth of shares.
Let’s go over hedge fund activity in other stocks similar to International Speedway Corp (NASDAQ:ISCA). We will take a look at Premier Inc (NASDAQ:PINC), Depomed Inc (NASDAQ:DEPO), AMN Healthcare Services, Inc. (NYSE:AHS), and Summit Midstream Partners LP (NYSE:SMLP). This group of stocks’ market caps match ISCA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PINC | 19 | 207165 | 5 |
| DEPO | 18 | 411369 | -5 |
| AHS | 23 | 100020 | 1 |
| SMLP | 5 | 104970 | 5 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $181 million in ISCA’s case. AMN Healthcare Services, Inc. (NYSE:AHS) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 5 bullish hedge fund positions. International Speedway Corp (NASDAQ:ISCA) 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 AHS might be a better candidate to consider taking a long position in.
Disclosure: none.
