Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Stantec Inc. (USA) (NYSE:STN), which is a provider of professional services in the area of infrastructure and facilities for clients in the public and private sectors, an exceptional investment today? Hedge funds are indeed getting less optimistic. The number of bullish hedge fund bets contracted by 2 recently. STN was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 8 hedge funds in our database with STN positions at the end of the previous quarter. At the end of this article we will also compare STN to other stocks including Louisiana-Pacific Corporation (NYSE:LPX), CNO Financial Group Inc (NYSE:CNO), and UniFirst Corp (NYSE:UNF) to get a better sense of its popularity.
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.
RossHelen/Shutterstock.com
How have hedgies been trading Stantec Inc. (USA) (NYSE:STN)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 25% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in STN heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daniel Bubis’ Tetrem Capital Management has the biggest position in Stantec Inc. (USA) (NYSE:STN), worth close to $11.1 million. Sitting at the No. 2 spot is D E Shaw, one of the biggest hedge funds in the world, which holds a $5 million position. Some other professional money managers that hold long positions contain Jim Simons’ Renaissance Technologies, Eric Sprott’s Sprott Asset Management and Francois Rochon’s Giverny Capital. We should note that Sprott Asset Management 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.
Since Stantec Inc. (USA) (NYSE:STN) has encountered declining sentiment from the smart money, it’s safe to say that there exists a select few hedgies who sold off their positions entirely last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cashed in the biggest investment of the “upper crust” of funds studied by Insider Monkey, comprising about $2.9 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund sold off about $0.4 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to Stantec Inc. (USA) (NYSE:STN). These stocks are Louisiana-Pacific Corporation (NYSE:LPX), CNO Financial Group Inc (NYSE:CNO), UniFirst Corp (NYSE:UNF), and Pure Storage Inc(NYSE:PSTG). All of these stocks’ market caps are closest to STN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPX | 32 | 460427 | 9 |
| CNO | 18 | 206206 | 10 |
| UNF | 13 | 185810 | -6 |
| PSTG | 17 | 127345 | 3 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $25 million in STN’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand UniFirst Corp (NYSE:UNF) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Stantec Inc. (USA) (NYSE:STN) is even less popular than UNF. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Suggested Articles:
Most Expensive Game on Google Play
Highest Paying Social Work Jobs
How To Move To Canada With No Money
Disclosure: None
