Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Resolute Energy Corp (NYSE:REN) .
Resolute Energy Corp (NYSE:REN) was in 12 hedge funds’ portfolios at the end of the third quarter of 2016. REN has experienced an increase in hedge fund interest lately. There were 6 hedge funds in our database with REN positions at the end of the previous quarter. At the end of this article we will also compare REN to other stocks including CU Bancorp (NASDAQ:CUNB), Green Bancorp Inc (NASDAQ:GNBC), and First Defiance Financial (NASDAQ:FDEF) to get a better sense of its popularity.
Follow Cimarex Resolute Llc (NYSE:REN)
Follow Cimarex Resolute Llc (NYSE:REN)
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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Keeping this in mind, we’re going to take a look at the recent action encompassing Resolute Energy Corp (NYSE:REN).
Hedge fund activity in Resolute Energy Corp (NYSE:REN)
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a growth of 100% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in REN at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Edward Gilhuly and Scott Stuart’s Sageview Capital has the most valuable position in Resolute Energy Corp (NYSE:REN), worth close to $26.5 million, comprising 10.9% of its total 13F portfolio. The second largest stake is held by Fir Tree, founded by Jeffrey Tannenbaum, which holds a $22.5 million position; 1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism contain Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, Kieran Goodwin’s Panning Capital Management and Michael Weinstock’s Monarch Alternative Capital. We should note that GRT Capital Partners 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.
With a general bullishness amongst the heavyweights, key money managers have jumped into Resolute Energy Corp (NYSE:REN) headfirst. Panning Capital Management created the biggest position in Resolute Energy Corp (NYSE:REN). Panning Capital Management had $15.4 million invested in the company at the end of the quarter. Monarch Alternative Capital also initiated a $14.1 million position during the quarter. The other funds with brand new REN positions are George McCabe’s Portolan Capital Management, Robert Vollero and Gentry T. Beach’s Vollero Beach Capital Partners, and Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Resolute Energy Corp (NYSE:REN) but similarly valued. These stocks are CU Bancorp (NASDAQ:CUNB), Green Bancorp Inc (NASDAQ:GNBC), First Defiance Financial (NASDAQ:FDEF), and Blue Nile Inc (NASDAQ:NILE). All of these stocks’ market caps are similar to REN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUNB | 6 | 29827 | 0 |
| GNBC | 6 | 4263 | 1 |
| FDEF | 7 | 20588 | 0 |
| NILE | 14 | 69025 | 1 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $122 million in REN’s case. Blue Nile Inc (NASDAQ:NILE) is the most popular stock in this table. On the other hand CU Bancorp (NASDAQ:CUNB) is the least popular one with only 6 bullish hedge fund positions. Resolute Energy Corp (NYSE:REN) 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 NILE might be a better candidate to consider taking a long position in.
Disclosure: none
