The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Alico, Inc. (NASDAQ:ALCO) from the perspective of those successful funds.
Alico, Inc. (NASDAQ:ALCO) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was included in the portfolios of six funds from our database at the end of September. At the end of this article we will also compare ALCO to other stocks including Nathan’s Famous, Inc. (NASDAQ:NATH), Cascadian Therapeutics Inc (USA) (NASDAQ:CASC), and Farmers Capital Bank Corp (NASDAQ:FFKT) to get a better sense of its popularity.
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 fresh action encompassing Alico, Inc. (NASDAQ:ALCO).
How are hedge funds trading Alico, Inc. (NASDAQ:ALCO)?
At the end of the third quarter, a total of six funds tracked by Insider Monkey were bullish on this stock, unchanged from the previous quarter. By comparison, seven funds held shares or bullish call options in ALCO heading into this year. So, let’s find 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, GMT Capital has the most valuable position in Alico, Inc. (NASDAQ:ALCO), worth close to $15.6 million. Coming in second is Remy Trafelet’s Trafelet Capital which holds a $9.3 million position; 7.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Daniel Beltzman and Gergory Smith’s Birch Run Capital, Martin Whitman’s Third Avenue Management and Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world. 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.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks similar to Alico, Inc. (NASDAQ:ALCO). We will take a look at Nathan’s Famous, Inc. (NASDAQ:NATH), Cascadian Therapeutics Inc (USA) (NASDAQ:CASC), Farmers Capital Bank Corp (NASDAQ:FFKT), and Verso Corporation (NYSE:VRS). This group of stocks’ market caps are similar to ALCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NATH | 5 | 28177 | -1 |
| CASC | 11 | 88603 | -3 |
| FFKT | 3 | 33480 | 0 |
| VRS | 17 | 67775 | 17 |
As you can see these stocks had an average of nine funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $37 million in ALCO’s case. Verso Corporation (NYSE:VRS) is the most popular stock in this table. On the other hand, Farmers Capital Bank Corp (NASDAQ:FFKT) is the least popular one with only three bullish hedge fund positions. Alico, Inc. (NASDAQ:ALCO) 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 VRS might be a better candidate to consider taking a long position in.
Disclosure: None
