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 elite funds in these small-cap stocks. In the following paragraphs, we analyze Delphi Automotive PLC (NYSE:DLPH) from the perspective of those elite funds.
Is Delphi Automotive PLC (NYSE:DLPH) a buy here? Money managers are in a bullish mood. The number of long hedge fund bets rose by 1 recently. 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 Dollar General Corp. (NYSE:DG), Baxalta Inc (NYSE:BXLT), and Public Service Enterprise Group Inc. (NYSE:PEG) to gather more data points.
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In the financial world there are several formulas stock traders have at their disposal to evaluate their holdings. A couple of the most underrated formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a healthy amount (see the details here).
Keeping this in mind, let’s review the recent action surrounding Delphi Automotive PLC (NYSE:DLPH).
Hedge fund activity in Delphi Automotive PLC (NYSE:DLPH)
Heading into Q4, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, inching up by 3% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Senator Investment Group, managed by Doug Silverman and Alexander Klabin, holds the largest position in Delphi Automotive PLC (NYSE:DLPH). The fund reportedly holds a $283.2 million stake in the company, comprising 3.5% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which holds a $167.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Robert Polak’s Anchor Bolt Capital, Ross Margolies’s Stelliam Investment Management and Dmitry Balyasny’s Balyasny Asset Management.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, assembled the biggest position in Delphi Automotive PLC (NYSE:DLPH), worth an estimated $12.5 million at the end of the quarter. Christopher A. Winham’s Tide Point Capital also made a $7.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Larry Foley and Paul Farrell’s Bronson Point Partners, John Overdeck and David Siegel’s Two Sigma Advisors, and Noam Gottesman’s GLG Partners.
Let’s check out hedge fund activity in other stocks similar to Delphi Automotive PLC (NYSE:DLPH). We will take a look at Dollar General Corp. (NYSE:DG), Baxalta Inc (NYSE:BXLT), Public Service Enterprise Group Inc. (NYSE:PEG), and Ryanair Holdings plc (ADR) (NASDAQ:RYAAY). This group of stocks’ market caps are similar to DLPH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DG | 49 | 1479609 | -9 |
| BXLT | 39 | 716895 | 35 |
| PEG | 20 | 491862 | -3 |
| RYAAY | 21 | 457712 | 2 |
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $787 million. That figure was $961 million in DLPH’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Public Service Enterprise Group Inc. (NYSE:PEG) is the least popular one with only 20 bullish hedge fund positions. Delphi Automotive PLC (NYSE:DLPH) 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 DG might be a better candidate to consider a long position.
