Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Mobile Mini Inc (NASDAQ:MINI) a buy right now? Prominent investors are surely in a pessimistic mood. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings went down by 1 in recent months. In thus way, there were 8 hedge funds in our database with MINI positions at the end of the last quarter. At the end of this article we will also compare MINI to other stocks including Otter Tail Corporation (NASDAQ:OTTR), CSG Systems International, Inc. (NASDAQ:CSGS), and TherapeuticsMD Inc (OTC:TXMD) 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.
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Hedge fund activity in Mobile Mini Inc (NASDAQ:MINI)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, down by 11% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in MINI heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the biggest position in Mobile Mini Inc (NASDAQ:MINI), worth close to $19.9 million. Sitting at the No. 2 spot is 12th Street Asset Management, led by Michael O’Keefe, holding a $18.1 million position; the fund has 6.9% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Peter Muller’s PDT Partners. We should note that 12th Street Asset Management 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.
Since Mobile Mini Inc (NASDAQ:MINI) has weathered a decline in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds that slashed their full holdings in the third quarter. Intriguingly, D E Shaw, one of the biggest hedge funds in the world,dumped the largest investment of the 700 funds monitored by Insider Monkey, valued at an estimated $1.4 million in stock. Jonathan Dawson’s fund, Southport Management, also dumped its stock, about $0.9 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mobile Mini Inc (NASDAQ:MINI) but similarly valued. These stocks are Otter Tail Corporation (NASDAQ:OTTR), CSG Systems International, Inc. (NASDAQ:CSGS), TherapeuticsMD Inc (OTC:TXMD), and Quad/Graphics, Inc. (NYSE:QUAD). This group of stocks’ market valuations are similar to MINI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OTTR | 8 | 31703 | -3 |
| CSGS | 16 | 157761 | -3 |
| TXMD | 13 | 56897 | 4 |
| QUAD | 21 | 107638 | 3 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $55 million in MINI’s case. Quad/Graphics, Inc. (NYSE:QUAD) is the most popular stock in this table. On the other hand Otter Tail Corporation (NASDAQ:OTTR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Mobile Mini Inc (NASDAQ:MINI) is even less popular than OTTR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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