Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Remy International Inc (NASDAQ:REMY) a buy right now? The best stock pickers are in a pessimistic mood. The number of long hedge fund positions went down by 2 lately. 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 Nantkwest Inc (NASDAQ:NK), PIMCO Corporate&Income Opportunity Fund (NYSE:PTY), and Stepan Company (NYSE:SCL) to gather more data points.
Follow Remy International Inc. (NASDAQ:REMY)
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To the average investor there are a lot of formulas investors employ to assess their holdings. A pair of the less utilized formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a superb amount (see the details here).
Keeping this in mind, we’re going to take a gander at the fresh action encompassing Remy International Inc (NASDAQ:REMY).
What does the smart money think about Remy International Inc (NASDAQ:REMY)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, H Partners Management, managed by Rehan Jaffer, holds the number one position in Remy International Inc (NASDAQ:REMY). H Partners Management has an $81.9 million position in the stock, comprising 6.1% of its 13F portfolio. On H Partners Management’s heels is Magnetar Capital, managed by Alec Litowitz and Ross Laser, which holds an $41.5 million position; 1.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism comprise Robert Emil Zoellner’s Alpine Associates, Paul Glazer’s Glazer Capital and John Orrico’s Water Island Capital.
Because Remy International Inc (NASDAQ:REMY) has experienced a decline in interest from the smart money, it’s safe to say that there was a specific group of funds that slashed their positions entirely by the end of the third quarter. Intriguingly, Tom Sandell’s Sandell Asset Management dumped the biggest stake of the 700 funds tracked by Insider Monkey, worth an estimated $14.9 million in stock, and George McCabe’s Portolan Capital Management was right behind this move, as the fund sold off about $7.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Remy International Inc (NASDAQ:REMY) but similarly valued. These stocks are Nantkwest Inc (NASDAQ:NK), PIMCO Corporate&Income Opportunity Fund (NYSE:PTY), Stepan Company (NYSE:SCL), and Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO). This group of stocks’ market values match REMY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NK | 5 | 61478 | 5 |
| PTY | 5 | 1060 | 1 |
| SCL | 14 | 40452 | -3 |
| SIMO | 20 | 113297 | -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 $54 million. That figure was $246 million in REMY’s case. Silicon Motion Technology Corp. (ADR) (NASDAQ:SIMO) is the most popular stock in this table. On the other hand Nantkwest Inc (NASDAQ:NK) is the least popular one with only 5 bullish hedge fund positions. Remy International Inc (NASDAQ:REMY) 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 SIMO might be a better candidate to consider a long position.
