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.
Abengoa Yield PLC (NASDAQ:ABY) was in 19 hedge funds’ portfolios at the end of the third quarter of 2015. ABY has seen a decrease in enthusiasm from smart money recently. There were 22 hedge funds in our database with ABY 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 International Bancshares Corp (NASDAQ:IBOC), ZS Pharma Inc (NASDAQ:ZSPH), and National Penn Bancshares (NASDAQ:NPBC) to gather more data points.
With all of this in mind, let’s take a glance at the fresh action encompassing Abengoa Yield PLC (NASDAQ:ABY).
What does the smart money think about Abengoa Yield PLC (NASDAQ:ABY)?
Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Daniel Lewis’s Orange Capital has the biggest position in Abengoa Yield PLC (NASDAQ:ABY), worth close to $62.4 million, comprising 4.8% of its total 13F portfolio. Coming in second is Roystone Capital Partners, led by Richard Barrera, holding a $60.3 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Phill Gross and Robert Atchinson’s Adage Capital Management, Alok Agrawal’s Bloom Tree Partners and Leon Cooperman’s Omega Advisors.
Due to the fact that Abengoa Yield PLC (NASDAQ:ABY) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there were a few fund managers who sold off their full holdings heading into Q4. Interestingly, Nick Niell’s Arrowgrass Capital Partners sold off the biggest position of the 700 funds tracked by Insider Monkey, comprising about $37.8 million in stock, and Daniel S. Och’s OZ Management was right behind this move, as the fund cut about $6 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Abengoa Yield PLC (NASDAQ:ABY) but similarly valued. These stocks are International Bancshares Corp (NASDAQ:IBOC), ZS Pharma Inc (NASDAQ:ZSPH), National Penn Bancshares (NASDAQ:NPBC), and Retail Opportunity Investments Corp (NASDAQ:ROIC). This group of stocks’ market valuations are similar to ABY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBOC | 12 | 31919 | 0 |
| ZSPH | 20 | 458423 | -2 |
| NPBC | 17 | 182523 | 1 |
| ROIC | 12 | 96612 | 2 |
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $383 million in ABY’s case. ZS Pharma Inc (NASDAQ:ZSPH) is the most popular stock in this table. On the other hand International Bancshares Corp (NASDAQ:IBOC) is the least popular one with only 12 bullish hedge fund positions. Abengoa Yield PLC (NASDAQ:ABY) 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 ZSPH might be a better candidate to consider a long position.
