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.
Stillwater Mining Company (NYSE:SWC) investors should pay attention to an increase in support from the world’s most successful money managers of late. There were 12 hedge funds in our database with SWC holdings at the end of the previous quarter. At the end of this article we will also compare SWC to other stocks including Diebold Incorporated (NYSE:DBD), FIRSTSERVICE CORPORATION (TSE:FSV), and Fabrinet (NYSE:FN) to get a better sense of its popularity.
Follow Stillwater Mining Co (NYSE:SWC)
Follow Stillwater Mining Co (NYSE:SWC)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Keeping this in mind, we’re going to go over the new action surrounding Stillwater Mining Company (NYSE:SWC).
What have hedge funds been doing with Stillwater Mining Company (NYSE:SWC)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a boost of 42% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SWC over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Platinum Asset Management, led by Kerr Neilson, holds the most valuable position in Stillwater Mining Company (NYSE:SWC). According to regulatory filings, the fund has a $173.8 million position in the stock, comprising 4.1% of its 13F portfolio. The second largest stake is held by GMT Capital, led by Thomas E. Claugus, holding a $53.7 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management. 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.
As one would reasonably expect, key hedge funds have been driving this bullishness. Millennium Management, led by Israel Englander, established the most outsized position in Stillwater Mining Company (NYSE:SWC). According to its latest 13F filing, the fund had $9.7 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $5.9 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management, and Steve Cohen’s Point72 Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Stillwater Mining Company (NYSE:SWC) but similarly valued. These stocks are Diebold Incorporated (NYSE:DBD), FIRSTSERVICE CORPORATION (TSE:FSV), Fabrinet (NYSE:FN), and NxStage Medical, Inc. (NASDAQ:NXTM). This group of stocks’ market valuations match SWC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DBD | 19 | 288057 | 4 |
| FSV | 10 | 111934 | 1 |
| FN | 23 | 205977 | 5 |
| NXTM | 26 | 322856 | -1 |
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 $232 million. That figure was $315 million in SWC’s case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table. On the other hand FIRSTSERVICE CORPORATION (TSE:FSV) is the least popular one with only 10 bullish hedge fund positions. Stillwater Mining Company (NYSE:SWC) 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 NXTM might be a better candidate to consider taking a long position in.
Disclosure: none.
