There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze PDL BioPharma Inc (NASDAQ:PDLI) .
PDL BioPharma Inc (NASDAQ:PDLI) shareholders have witnessed an increase in enthusiasm from smart money recently. PDLI was in 20 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with PDLI positions 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 Global Eagle Acquisition Corp (NASDAQ:ENT), Nuveen Floating Rate Income Fund (NYSE:JFR), and Intrawest Resorts Holdings Inc (NYSE:SNOW) to gather more data points.
Follow Pdl Biopharma Inc. (NASDAQ:PDLI)
Follow Pdl Biopharma Inc. (NASDAQ:PDLI)
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 does the smart money think about PDL BioPharma Inc (NASDAQ:PDLI)?
Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 43% from the second quarter of 2016. On the other hand, there were a total of 18 hedge funds with a bullish position in PDLI at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the most valuable position in PDL BioPharma Inc (NASDAQ:PDLI), worth close to $45.1 million. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $9.2 million position. Some other peers that hold long positions include Joel Greenblatt’s Gotham Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors. 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.
With a general bullishness amongst the heavyweights, key money managers have jumped into PDL BioPharma Inc (NASDAQ:PDLI) headfirst. Armistice Capital, led by Steven Boyd, created the biggest position in PDL BioPharma Inc (NASDAQ:PDLI). Armistice Capital had $8.8 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin’s Great Point Partners also initiated a $2.2 million position during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Paul Orlin and Alex Porter’s Amici Capital, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.
Let’s go over hedge fund activity in other stocks similar to PDL BioPharma Inc (NASDAQ:PDLI). We will take a look at Global Eagle Acquisition Corp (NASDAQ:ENT), Nuveen Floating Rate Income Fund (NYSE:JFR), Intrawest Resorts Holdings Inc (NYSE:SNOW), and Mercer International Inc. (NASDAQ:MERC). All of these stocks’ market caps are similar to PDLI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENT | 11 | 308827 | -2 |
| JFR | 4 | 4183 | -1 |
| SNOW | 10 | 36175 | 2 |
| MERC | 15 | 169771 | -6 |
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 $130 million. That figure was $81 million in PDLI’s case. Mercer International Inc. (NASDAQ:MERC) is the most popular stock in this table. On the other hand Nuveen Floating Rate Income Fund (NYSE:JFR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks PDL BioPharma Inc (NASDAQ:PDLI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
