Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
On Deck Capital Inc (NYSE:ONDK) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of September. 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 Green Brick Partners Inc (NASDAQ:GRBK), Dynavax Technologies Corporation (NASDAQ:DVAX), and BioTime, Inc. (NYSEAMEX:BTX) to gather more data points.
Follow On Deck Capital Inc. (NYSE:ONDK)
Follow On Deck Capital Inc. (NYSE:ONDK)
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, we’re going to go over the key action regarding On Deck Capital Inc (NYSE:ONDK).
How have hedgies been trading On Deck Capital Inc (NYSE:ONDK)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2016. By comparison, 13 hedge funds held shares or bullish call options in ONDK heading into this year. So, let’s see 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, Tybourne Capital Management, led by Eashwar Krishnan, holds the number one position in On Deck Capital Inc (NYSE:ONDK). Tybourne Capital Management has a $35.2 million position in the stock, comprising 1.8% of its 13F portfolio. The second most bullish fund manager is Tiger Global Management LLC, led by Chase Coleman, which holds a $21.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Michael Barnes and Arif Inayatullah’s Tricadia Capital Management, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management and Mario Cibelli’s Marathon Partners. We should note that two of these hedge funds (Tybourne Capital Management and Nantahala Capital Management) 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cashed in their entire stakes in the stock during the third quarter. Interestingly, Andrew Sandler’s Sandler Capital Management cashed in the biggest investment of the 700 funds followed by Insider Monkey, valued at an estimated $4.3 million in stock. Marc Majzner’s fund, Clearline Capital, also sold off its stock, about $3.7 million worth.
Let’s also examine hedge fund activity in other stocks similar to On Deck Capital Inc (NYSE:ONDK). We will take a look at Green Brick Partners Inc (NASDAQ:GRBK), Dynavax Technologies Corporation (NASDAQ:DVAX), BioTime, Inc. (NYSEAMEX:BTX), and Teligent Inc (NASDAQ:TLGT). All of these stocks’ market caps are similar to ONDK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRBK | 8 | 281130 | 2 |
| DVAX | 22 | 131144 | -1 |
| BTX | 7 | 102369 | 1 |
| TLGT | 7 | 31292 | 0 |
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 $136 million. That figure was $73 million in ONDK’s case. Dynavax Technologies Corporation (NASDAQ:DVAX) is the most popular stock in this table. On the other hand BioTime, Inc. (NYSEAMEX:BTX) is the least popular one with only 7 bullish hedge fund positions. On Deck Capital Inc (NYSE:ONDK) is not the least popular stock in this group but hedge fund interest is just 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 DVAX might be a better candidate to consider taking a long position in.
