At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost Group, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Videocon d2h Ltd – ADR (NASDAQ:VDTH) has seen a decrease in hedge fund sentiment lately. VDTH was in 19 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with VDTH 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 Capstead Mortgage Corporation (NYSE:CMO), US Ecology Inc. (NASDAQ:ECOL), and Callidus Software Inc. (NASDAQ:CALD) to gather more data points.
To most market participants, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are greater than an 8,000 funds trading at present, our experts choose to focus on the bigwigs of this club, about 700 funds. Most estimates calculate that this group of people handle most of all hedge funds’ total capital, and by following their first-class equity investments, Insider Monkey has come up with several investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to check out the recent action surrounding Videocon d2h Ltd – ADR (NASDAQ:VDTH).
How have hedgies been trading Videocon d2h Ltd – ADR (NASDAQ:VDTH)?
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 10% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Christian Leone’s Luxor Capital Group has the most valuable position in Videocon d2h Ltd – ADR (NASDAQ:VDTH), worth close to $80.5 million, accounting for 1.8% of its total 13F portfolio. Coming in second is Trafelet Capital, managed by Remy Trafelet, which holds a $13.9 million position; the fund has 9.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Matthew Halbower’s Pentwater Capital Management, Noam Gottesman’s GLG Partners, and Richard Driehaus’ Driehaus Capital.
Because Videocon d2h Ltd – ADR (NASDAQ:VDTH) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their full holdings last quarter. Intriguingly, Jason Karp’s Tourbillon Capital Partners cut the largest stake of all the hedgies tracked by Insider Monkey, totaling about $14 million in stock. Jonathan Lennon’s fund, Pleasant Lake Partners, also cut its stock, about $3.9 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Videocon d2h Ltd – ADR (NASDAQ:VDTH). We will take a look at Capstead Mortgage Corporation (NYSE:CMO), US Ecology Inc. (NASDAQ:ECOL), Callidus Software Inc. (NASDAQ:CALD), and Cabot Microelectronics Corporation (NASDAQ:CCMP). This group of stocks’ market valuations match VDTH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMO | 7 | 17484 | -4 |
| ECOL | 12 | 114802 | 5 |
| CALD | 19 | 153048 | 0 |
| CCMP | 18 | 101790 | 0 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $145 million in VDTH’s case. Callidus Software Inc. (NASDAQ:CALD) is the most popular stock in this table. On the other hand Capstead Mortgage Corporation (NYSE:CMO) is the least popular one with only 7 bullish hedge fund positions. Videocon d2h Ltd – ADR (NASDAQ:VDTH) is tied with CALD as the most popular stock in this group. This is a positive signal and both CALD and VDTH might be good candidates to consider long positions in.
