Many believe that the end of the near-zero interest rate era will put some weight on U.S. equities, which might give hedge funds a change to prove their stock picking abilities once again. Although the low interest rate environment will most likely stick around for quite some time, it would be worthwhile to look how hedge funds and other investors adjust their investment strategies and decisions after the recent rate hike. Tracking hedge funds’ moves should represent a key part of one’s stock analysis process, as it pays to know what the most financially-educated and bright minds of the finance world think of certain companies. For that reason, this article will discuss three filings submitted with the SEC by several hedge funds tracked by the Insider Monkey team.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.
According to a Schedule 13D filing, Scopia Capital Management, founded by Matt Sirovich and Jeremy Mindich, owns 3.26 million shares in Itron Inc. (NASDAQ:ITRI), accounting for 8.6% of the company’s outstanding common stock. Scopia Capital reported owning 1.92 million shares in the company through its 13F filing for the September quarter. It should be mentioned that Scopia Capital and Jerome Lande’s Coppersmith Capital Management teamed up in September to launch their activist campaign on Itron Inc. (NASDAQ:ITRI), and currently own a group stake of 6.11 million shares. On December 10, the technology and services company announced a cooperating agreement with both Coppersmith Capital and Scopia Capital, under which Jerome Lande and Peter Mainz, a candidate identified by Coppersmith, were added to the company’s Board of Directors. The company also formed a Value Enhancement Committee “to review, study and develop potential initiatives (including transactions) designed to create durable, sustainable long-term shareholder value”. The technology company that offers end-to-end smart metering solutions to electric, natural gas, and water utilities reported revenues of $1.4 billion for the nine months that ended September 30, as compared to $1.5 billion reported a year ago. The company’s top-line figure was mainly impacted by foreign exchange rates, as revenues increased by $66.7 million year-over-year on a constant currency basis. Shares of Itron are nearly 15% in the red this year, so it remains to see whether the aforementioned hedge funds will achieve success in creating shareholder value. A number of 16 hedge funds from our database were invested in the company at the end of the third quarter, stockpiling 16.40% of its outstanding shares. Ian Simm’s Impax Asset Management owns 1.22 million shares in Itron Inc. (NASDAQ:ITRI) as of September 30.
Follow Matt Sirovich's Scopia Capital
The second page of this article will discuss two separate filings submitted by Sandell Asset Management and Kingdom Ridge Capital.
