Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is SP Plus Corp (NASDAQ:SP) a buy, sell, or hold? Hedge funds are categorically getting more bullish. The number of bullish hedge fund positions swelled by 2 lately. SP was in 10 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with SP positions at the end of the previous quarter. At the end of this article we will also compare SP to other stocks including K12 Inc. (NYSE:LRN), Kforce Inc. (NASDAQ:KFRC), and Kadant Inc. (NYSE:KAI) to get a better sense of its popularity.
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How have hedgies been trading SP Plus Corp (NASDAQ:SP)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 25% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in SP heading into this year. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Leon Lowenstein of Lionstone Capital Management holds the most valuable position in SP Plus Corp (NASDAQ:SP). Lionstone Capital Management has a $20.5 million position in the stock, comprising 12.6% of its 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world; with a $5.2 million position. Other hedge funds and institutional investors with similar optimism contain Martin Whitman’s Third Avenue Management, Paul Hondros’ AlphaOne Capital Partners and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. 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.
Consequently, key hedge funds have jumped into SP Plus Corp (NASDAQ:SP) headfirst. Third Avenue Management created the biggest position in SP Plus Corp (NASDAQ:SP). Third Avenue Management had $3.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new SP position is Joel Greenblatt’s Gotham Asset Management.
Let’s go over hedge fund activity in other stocks similar to SP Plus Corp (NASDAQ:SP). These stocks are K12 Inc. (NYSE:LRN), Kforce Inc. (NASDAQ:KFRC), Kadant Inc. (NYSE:KAI), and CytomX Therapeutics Inc (NASDAQ:CTMX). This group of stocks’ market values match SP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LRN | 17 | 64846 | 2 |
| KFRC | 8 | 21991 | -6 |
| KAI | 13 | 57330 | -2 |
| CTMX | 7 | 46621 | -2 |
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 $48 million. That figure was $34 million in SP’s case. K12 Inc. (NYSE:LRN) is the most popular stock in this table. On the other hand CytomX Therapeutics Inc (NASDAQ:CTMX) is the least popular one with only 7 bullish hedge fund positions. SP Plus Corp (NASDAQ:SP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LRN might be a better candidate to consider taking a long position in.
Disclosure: None
