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: TerraForm Global Inc (NASDAQ:GLBL).
TerraForm Global Inc (NASDAQ:GLBL) was in 15 hedge funds’ portfolios at the end of September. GLBL has seen a decrease in activity from the world’s largest hedge funds lately. There were 16 hedge funds in our database with GLBL positions 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 Douglas Dynamics Inc (NYSE:PLOW), Costamare Inc (NYSE:CMRE), and Regis Corporation (NYSE:RGS) to gather more data points.
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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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What does the smart money think about TerraForm Global Inc (NASDAQ:GLBL)?
Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a fall of 6% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in GLBL heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Hahn’s Quentec Asset Management has the biggest position in TerraForm Global Inc (NASDAQ:GLBL), worth close to $24.8 million, comprising 3.4% of its total 13F portfolio. On Quentec Asset Management’s heels is Luminus Management, led by Jonathan Barrett and Paul Segal, holding a $21 million position. Remaining hedge funds and institutional investors that are bullish consist of Phill Gross and Robert Atchinson’s Adage Capital Management, David Tepper’s Appaloosa Management LP and Philip Hempleman’s Ardsley Partners. We should note that Luminus 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.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually sold off their positions entirely. At the top of the heap, Jerome L. Simon’s Lonestar Capital Management sold off the largest investment of the 700 funds followed by Insider Monkey, worth close to $7.7 million in stock, and Edward A. Mule’s Silver Point Capital was right behind this move, as the fund dropped about $6.9 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to TerraForm Global Inc (NASDAQ:GLBL). We will take a look at Douglas Dynamics Inc (NYSE:PLOW), Costamare Inc (NYSE:CMRE), Regis Corporation (NYSE:RGS), and Republic Bancorp, Inc. KY (NASDAQ:RBCAA). This group of stocks’ market caps are closest to GLBL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PLOW | 11 | 19491 | 0 |
| CMRE | 11 | 22129 | 4 |
| RGS | 14 | 194863 | 0 |
| RBCAA | 5 | 19468 | 0 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $124 million in GLBL’s case. Regis Corporation (NYSE:RGS) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks TerraForm Global Inc (NASDAQ:GLBL) 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.
Disclosure: None
