At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Luxoft Holding Inc (NYSE:LXFT) ready to rally soon? The best stock pickers are unmistakably in a pessimistic mood. The number of long hedge fund bets slashed by 4 lately. There were 16 hedge funds in our database with LXFT 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 CEB Inc. (NYSE:CEB), Imperva Inc (NYSE:IMPV), and Stag Industrial Inc (NYSE:STAG) to gather more data points.
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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With all of this in mind, let’s check out the key action regarding Luxoft Holding Inc (NYSE:LXFT).
What does the smart money think about Luxoft Holding Inc (NYSE:LXFT)?
Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 25% from the second quarter of 2016. On the other hand, there were a total of 15 hedge funds with a bullish position in LXFT at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Kerrisdale Capital, led by Sahm Adrangi, holds the number one position in Luxoft Holding Inc (NYSE:LXFT). Kerrisdale Capital has a $24.9 million position in the stock, comprising 16.1% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $17.4 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish encompass Millennium Management, , one of the 10 largest hedge funds in the world, Jacob Rothschild’s RIT Capital Partners and John Overdeck and David Siegel’s Two Sigma Advisors. 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.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dumped their positions entirely. It’s worth mentioning that Alok Agrawal’s Bloom Tree Partners dumped the largest investment of all the hedgies followed by Insider Monkey, worth an estimated $6.4 million in stock, and Gunnar Overstrom’s Three Corner Global Investors was right behind this move, as the fund said goodbye to about $2.8 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Luxoft Holding Inc (NYSE:LXFT) but similarly valued. We will take a look at CEB Inc. (NYSE:CEB), Imperva Inc (NYSE:IMPV), Stag Industrial Inc (NYSE:STAG), and Impax Laboratories Inc (NASDAQ:IPXL). This group of stocks’ market valuations are similar to LXFT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CEB | 12 | 66299 | 1 |
| IMPV | 33 | 489982 | 12 |
| STAG | 6 | 60320 | 0 |
| IPXL | 16 | 313306 | -2 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $58 million in LXFT’s case. Imperva Inc (NYSE:IMPV) is the most popular stock in this table. On the other hand Stag Industrial Inc (NYSE:STAG) is the least popular one with only 6 bullish hedge fund positions. Luxoft Holding Inc (NYSE:LXFT) 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 IMPV might be a better candidate to consider taking a long position in.
Disclosure: none
