Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Blue Buffalo Pet Products Inc (NASDAQ:BUFF) an excellent investment now? Hedge funds are becoming more confident. The number of long hedge fund bets rose by 2 recently. BUFF was in 28 hedge funds’ portfolios at the end of the third quarter of 2016. There were 26 hedge funds in our database with BUFF positions at the end of the previous quarter. At the end of this article we will also compare BUFF to other stocks including Donaldson Company, Inc. (NYSE:DCI), Equity One, Inc. (NYSE:EQY), and People’s United Financial, Inc. (NASDAQ:PBCT) to get a better sense of its popularity.
Follow Blue Buffalo Pet Products Inc. (NASDAQ:BUFF)
Follow Blue Buffalo Pet Products Inc. (NASDAQ:BUFF)
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.
Copyright: leaf / 123RF Stock Photo
What does the smart money think about Blue Buffalo Pet Products Inc (NASDAQ:BUFF)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, an 8% increase from the previous quarter and the second-straight quarter with a surge in hedge fund ownership. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Hitchwood Capital Management, managed by James Crichton, holds the number one position in Blue Buffalo Pet Products Inc (NASDAQ:BUFF). Hitchwood Capital Management has an $85.5 million position in the stock, comprising 2.6% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $42.2 million position. Other members of the smart money that hold long positions encompass Anand Parekh’s Alyeska Investment Group, Jim Simons’ Renaissance Technologies and Dmitry Balyasny’s Balyasny Asset Management.
As aggregate interest increased, specific money managers have been driving this bullishness. Segantii Capital, managed by Simon Sadler, assembled the most outsized position in Blue Buffalo Pet Products Inc (NASDAQ:BUFF). Segantii Capital had $5.2 million invested in the company at the end of the quarter. Larry Foley and Paul Farrell’s Bronson Point Partners also initiated a $4.8 million position during the quarter. The following funds were also among the new BUFF investors: Michael Platt and William Reeves’ BlueCrest Capital Mgmt., Lee Ainslie’s Maverick Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now review hedge fund activity in other stocks similar to Blue Buffalo Pet Products Inc (NASDAQ:BUFF). These stocks are Donaldson Company, Inc. (NYSE:DCI), Equity One, Inc. (NYSE:EQY), People’s United Financial, Inc. (NASDAQ:PBCT), and Howard Hughes Corp (NYSE:HHC). This group of stocks’ market caps match BUFF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DCI | 12 | 130412 | 0 |
| EQY | 10 | 92783 | -8 |
| PBCT | 12 | 54291 | -5 |
| HHC | 23 | 1031145 | -1 |
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $327 million. That figure was $309 million in BUFF’s case. Howard Hughes Corp (NYSE:HHC) is the most popular stock in this table. On the other hand Equity One, Inc. (NYSE:EQY) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Blue Buffalo Pet Products Inc (NASDAQ:BUFF) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and continue to grow more bullish, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
