The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Atlantic Power Corp (NYSE:AT) from the perspective of those successful funds.
Atlantic Power Corp (NYSE:AT) was in 13 hedge funds’ portfolios at the end of September. AT shareholders have witnessed an increase in support from the world’s most successful money managers recently. There were 10 hedge funds in our database with AT holdings at the end of the previous quarter. 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 Farmers National Banc Corp (NASDAQ:FMNB), The Chefs Warehouse, Inc (NASDAQ:CHEF), and Panhandle Oil and Gas Inc. (NYSE:PHX) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with Atlantic Power Corp (NYSE:AT)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 30% increase from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AT over the last 5 quarters, which shows them hitting a yearly high at the end of September. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nathaniel August’s Mangrove Partners has the biggest position in Atlantic Power Corp (NYSE:AT), worth close to $19.4 million, accounting for 4.5% of its total 13F portfolio. The second most bullish fund manager is 12 West Capital Management, led by Joel Ramin, which holds an $18.1 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise David M. Markowitz’s Oskie Capital Management, D E Shaw, one of the biggest hedge funds in the world, and James Dondero’s Highland Capital Management. We should note that Mangrove Partners 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.
Now, key money managers were breaking ground themselves. Jim Simons’ Renaissance Technologies created the most outsized position in Atlantic Power Corp (NYSE:AT). Renaissance Technologies had $0.1 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a small position during the quarter. The other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Atlantic Power Corp (NYSE:AT) but similarly valued. These stocks are Farmers National Banc Corp (NASDAQ:FMNB), The Chefs Warehouse, Inc (NASDAQ:CHEF), Panhandle Oil and Gas Inc. (NYSE:PHX), and Magnachip Semiconductor Corp (NYSE:MX). This group of stocks’ market values match AT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMNB | 7 | 9235 | 1 |
| CHEF | 5 | 12585 | 0 |
| PHX | 4 | 35866 | 0 |
| MX | 24 | 160551 | 8 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $44 million in AT’s case. Magnachip Semiconductor Corp (NYSE:MX) is the most popular stock in this table. On the other hand Panhandle Oil and Gas Inc. (NYSE:PHX) is the least popular one with only 4 bullish hedge fund positions. Atlantic Power Corp (NYSE:AT) 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 MX might be a better candidate to consider taking a long position in.
Disclosure: None
