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: PDC Energy Inc (NASDAQ:PDCE).
Is PDC Energy Inc (NASDAQ:PDCE) a healthy stock for your portfolio? The smart money is betting on the stock. The number of bullish hedge fund bets increased by 4 recently. Our calculations also showed that pdce isn’t among the 30 most popular stocks among hedge funds. PDCE was in 19 hedge funds’ portfolios at the end of the third quarter of 2018. There were 15 hedge funds in our database with PDCE positions at the end of the previous quarter.
In today’s marketplace there are dozens of signals market participants employ to grade stocks. Two of the less known signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a solid margin (see the details here).
We’re going to take a peek at the recent hedge fund action surrounding PDC Energy Inc (NASDAQ:PDCE).
Hedge fund activity in PDC Energy Inc (NASDAQ:PDCE)
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PDCE over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Mangrove Partners held the most valuable stake in PDC Energy Inc (NASDAQ:PDCE), which was worth $33.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $33.3 million worth of shares. Moreover, D E Shaw, Brenham Capital Management, and Perella Weinberg Partners were also bullish on PDC Energy Inc (NASDAQ:PDCE), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds were leading the bulls’ herd. Brenham Capital Management, managed by John Labanowski, created the most outsized position in PDC Energy Inc (NASDAQ:PDCE). Brenham Capital Management had $21.7 million invested in the company at the end of the quarter. Daniel Arbess’s Perella Weinberg Partners also made a $19.9 million investment in the stock during the quarter. The other funds with brand new PDCE positions are Dmitry Balyasny’s Balyasny Asset Management, Israel Englander’s Millennium Management, and Anand Parekh’s Alyeska Investment Group.
Let’s now review hedge fund activity in other stocks similar to PDC Energy Inc (NASDAQ:PDCE). These stocks are Sensient Technologies Corporation (NYSE:SXT), Rexnord Corp (NYSE:RXN), Hilton Grand Vacations Inc. (NYSE:HGV), and Smartsheet Inc. (NYSE:SMAR). This group of stocks’ market values are closest to PDCE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SXT | 11 | 74341 | -3 |
| RXN | 15 | 169987 | -1 |
| HGV | 27 | 587168 | 4 |
| SMAR | 11 | 102729 | 0 |
| Average | 16 | 233556 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $182 million in PDCE’s case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand Sensient Technologies Corporation (NYSE:SXT) is the least popular one with only 11 bullish hedge fund positions. PDC Energy Inc (NASDAQ:PDCE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HGV might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
