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 QEP Resources Inc (NYSE:QEP) from the perspective of those elite funds.
Is QEP Resources Inc (NYSE:QEP) undervalued? Some money managers abandoned the stock during Q3 but this may prove to be a bad move for them. The number of long hedge fund bets decreased by 3 recently. At the end of this article we will also compare QEP to other stocks including Ternium S.A. (ADR) (NYSE:TX), Syntel, Inc. (NASDAQ:SYNT), and VWR Corp (NASDAQ:VWR) to get a better sense of its popularity.
Follow Qep Resources Inc. (NYSE:QEP)
Follow Qep Resources Inc. (NYSE:QEP)
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.
ded pixto/Shutterstock.com
How are hedge funds trading QEP Resources Inc (NYSE:QEP)?
At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 9% from one quarter earlier. However, overall hedge fund sentiment is still near its peak as you can see from the graph below. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in QEP Resources Inc (NYSE:QEP). D E Shaw has a $67.4 million position in the stock. The second most bullish fund manager is Israel Englander of Millennium Management, with a $65 million position. Other members of the smart money that are bullish consist of Cliff Asness’ AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Rob Citrone’s Discovery Capital Management.
Due to the fact that QEP Resources Inc (NYSE:QEP) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there were a few funds who sold off their positions entirely heading into fourth quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital cut the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $15.5 million in stock, and Paul Singer’s Elliott Management was right behind this move, as the fund sold off about $8.8 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds heading into fourth quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as QEP Resources Inc (NYSE:QEP) but similarly valued. These stocks are Ternium S.A. (ADR) (NYSE:TX), Syntel, Inc. (NASDAQ:SYNT), VWR Corp (NASDAQ:VWR), and SYNNEX Corporation (NYSE:SNX). This group of stocks’ market caps match QEP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TX | 14 | 89430 | 0 |
| SYNT | 15 | 53525 | -3 |
| VWR | 26 | 288144 | 5 |
| SNX | 17 | 126694 | 4 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $528 million in QEP’s case. VWR Corp (NASDAQ:VWR) is the most popular stock in this table. On the other hand Ternium S.A. (ADR) (NYSE:TX) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks QEP Resources Inc (NYSE:QEP) 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
