Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Solera Holdings Inc (NYSE:SLH) was in 38 hedge funds’ portfolios at the end of the third quarter of 2015. SLH investors should be aware of an increase in support from the world’s most elite money managers lately. There were 18 hedge funds in our database with SLH holdings 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 PTC Inc (NASDAQ:PTC), First Niagara Financial Group Inc. (NASDAQ:FNFG), and NetScout Systems, Inc. (NASDAQ:NTCT) to gather more data points.
Follow Solera Holdings Inc (NYSE:SLH)
Follow Solera Holdings Inc (NYSE:SLH)
In the 21st-century investor’s toolkit, there are numerous methods shareholders use to size up publicly traded companies. Two of the most underrated methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best fund managers can beat the broader indices by a significant margin (see the details here).
With all of this in mind, we’re going to take a glance at the latest action regarding Solera Holdings Inc (NYSE:SLH).
How are hedge funds trading Solera Holdings Inc (NYSE:SLH)?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 111% from the second quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Nick Niell’s Arrowgrass Capital Partners has the number one position in Solera Holdings Inc (NYSE:SLH), worth close to $165.9 million, corresponding to 3.1% of its total 13F portfolio. Sitting at the No. 2 spot is Carl Tiedemann and Michael Tiedemann of TIG Advisors, with an $120.5 million position; the fund has 5.5% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Thomas Steyer’s Farallon Capital, D. E. Shaw’s D E Shaw, Shane Finemore’s Manikay Partners, and Matthew Halbower’s Pentwater Capital Management.
As aggregate interest increased, key money managers were breaking ground themselves. Arrowgrass Capital Partners, managed by Nick Niell, initiated the most valuable position in Solera Holdings Inc (NYSE:SLH). Arrowgrass Capital Partners had $165.9 million invested in the company at the end of the quarter. Carl Tiedemann and Michael Tiedemann’s TIG Advisors also made an $120.5 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Solera Holdings Inc (NYSE:SLH) but similarly valued. We will take a look at PTC Inc (NASDAQ:PTC), First Niagara Financial Group Inc. (NASDAQ:FNFG), NetScout Systems, Inc. (NASDAQ:NTCT), and CNO Financial Group Inc (NYSE:CNO). This group of stocks’ market caps are closest to SLH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PTC | 33 | 691759 | 12 |
| FNFG | 27 | 168431 | 2 |
| NTCT | 25 | 411741 | 0 |
| CNO | 8 | 250450 | 1 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $381 million. That figure was $983 million in SLH’s case. PTC Inc (NASDAQ:PTC) is the most popular stock in this table. On the other hand CNO Financial Group Inc (NYSE:CNO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Solera Holdings Inc (NYSE:SLH) 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.
