At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, 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.
Web.com Group Inc (NASDAQ:WEB) was in 24 hedge funds’ portfolios at the end of September. WEB shareholders have witnessed an increase in enthusiasm from smart money lately. There were 19 hedge funds in our database with WEB holdings at the end of the previous quarter. At the end of this article we will also compare WEB to other stocks including GTT Communications Inc (NYSE:GTT), Kindred Healthcare, Inc. (NYSE:KND), and Pengrowth Energy Corp (USA) (NYSE:PGH) to get a better sense of its popularity.
Follow Web.com Group Inc. (NASDAQ:WEB)
Follow Web.com Group Inc. (NASDAQ:WEB)
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, we’re going to take a glance at the key action surrounding Web.com Group Inc (NASDAQ:WEB).
What have hedge funds been doing with Web.com Group Inc (NASDAQ:WEB)?
Heading into the fourth quarter of 2016, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 26% from the second quarter of 2016. By comparison, 24 hedge funds held shares or bullish call options in WEB heading into this year. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ahmet Okumus’s Okumus Fund Management has the largest position in Web.com Group Inc (NASDAQ:WEB), worth close to $164.5 million, accounting for 36.9% of its total 13F portfolio. On Okumus Fund Management’s heels is Polaris Capital Management, led by Bernard Horn, holding a $20 million position; 1.6% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish encompass D. E. Shaw’s D E Shaw, Douglas Dossey and Arthur Young’s Tensile Capital and Amish Mehta’s SQN Investors. We should note that two of these hedge funds (Tensile Capital and SQN Investors) 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.
With a general bullishness amongst the heavyweights, key money managers have jumped into Web.com Group Inc (NASDAQ:WEB) headfirst. Engaged Capital, led by Glenn W. Welling, initiated the most valuable position in Web.com Group Inc (NASDAQ:WEB). According to regulatory filings, the fund had $2.2 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also made a $1 million investment in the stock during the quarter. The other funds with brand new WEB positions are Jonathan Lourie and Stuart Fiertz’s Cheyne Capital, Roger Ibbotson’s Zebra Capital Management, and Matthew Tewksbury’s Stevens Capital Management.
Let’s check out hedge fund activity in other stocks similar to Web.com Group Inc (NASDAQ:WEB). These stocks are GTT Communications Inc (NYSE:GTT), Kindred Healthcare, Inc. (NYSE:KND), Pengrowth Energy Corp (USA) (NYSE:PGH), and Invesco Dynamic Credit Opportunities Fd (NYSE:VTA). This group of stocks’ market caps are similar to WEB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTT | 15 | 153152 | 0 |
| KND | 20 | 153114 | 3 |
| PGH | 7 | 9584 | 2 |
| VTA | 4 | 11543 | -2 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $236 million in WEB’s case. Kindred Healthcare, Inc. (NYSE:KND) is the most popular stock in this table. On the other hand Invesco Dynamic Credit Opportunities Fd (NYSE:VTA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Web.com Group Inc (NASDAQ:WEB) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none.
