We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Craft Brew Alliance Inc (NASDAQ:BREW) , and what that likely means for the prospects of the company and its stock.
Craft Brew Alliance Inc (NASDAQ:BREW) was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. BREW shareholders have witnessed an increase in support from the world’s most successful money managers in recent months. There were 0 hedge funds in our database with BREW positions at the end of the previous quarter. At the end of this article we will also compare BREW to other stocks including Geron Corporation (NASDAQ:GERN), Adamas Pharmaceuticals Inc (NASDAQ:ADMS), and Columbus McKinnon Corp. (NASDAQ:CMCO) to get a better sense of its popularity.
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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Now, we’re going to take a peek at the key action surrounding Craft Brew Alliance Inc (NASDAQ:BREW).
What have hedge funds been doing with Craft Brew Alliance Inc (NASDAQ:BREW)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock. On the other hand, there were a total of 0 hedge funds with a bullish position in BREW at the beginning of this year. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in Craft Brew Alliance Inc (NASDAQ:BREW). Renaissance Technologies has a $3.3 million position in the stock. The second largest stake is held by Mark Broach’s Manatuck Hill Partners which holds a $1.4 million position. Other peers that are bullish encompass Matthew Hulsizer’s PEAK6 Capital Management, and Ken Griffin’s Citadel Investment Group. 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.
Let’s now take a look at hedge fund activity in other stocks similar to Craft Brew Alliance Inc (NASDAQ:BREW). These stocks are Geron Corporation (NASDAQ:GERN), Adamas Pharmaceuticals Inc (NASDAQ:ADMS), Columbus McKinnon Corp. (NASDAQ:CMCO), and CNX Coal Resources LP (NYSE:CNXC). All of these stocks’ market caps resemble BREW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GERN | 5 | 2535 | -6 |
| ADMS | 17 | 115160 | 2 |
| CMCO | 14 | 65405 | -1 |
| CNXC | 7 | 96645 | 1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $7 million in BREW’s case. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) is the most popular stock in this table. On the other hand Geron Corporation (NASDAQ:GERN) is the least popular one with only 5 bullish hedge fund positions. Craft Brew Alliance Inc (NASDAQ:BREW) 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 ADMS might be a better candidate to consider taking a long position in.
Disclosure: None
