You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
El Paso Electric Company (NYSE:EE) investors should pay attention to a decrease in hedge fund interest in recent months. EE was in 9 hedge funds’ portfolios at the end of the third quarter of 2015. There were 13 hedge funds in our database with EE 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 Colliers International Group Inc (NASDAQ:CIGI), Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV), and Interface, Inc. (NASDAQ:TILE) to gather more data points.
Follow El Paso Electric Co (NYSE:EE)
Follow El Paso Electric Co (NYSE:EE)
With all of this in mind, let’s take a look at the new action surrounding El Paso Electric Company (NYSE:EE).
How are hedge funds trading El Paso Electric Company (NYSE:EE)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mario Gabelli’s GAMCO Investors has the number one position in El Paso Electric Company (NYSE:EE), worth close to $65.3 million, corresponding to 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $30.2 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Jonathan Barrett and Paul Segal’s Luminus Management and D E Shaw.
Judging by the fact that El Paso Electric Company (NYSE:EE) has witnessed bearish sentiment from the smart money, logic holds that there exists a select few fund managers who sold off their full holdings by the end of the third quarter. At the top of the heap, Michael Platt and William Reeves’ BlueCrest Capital Mgmt. cut the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $0.7 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund said goodbye to about $0.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to El Paso Electric Company (NYSE:EE). These stocks are Colliers International Group Inc (NASDAQ:CIGI), Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV), Interface, Inc. (NASDAQ:TILE), and Neustar Inc (NYSE:NSR). All of these stocks’ market caps are closest to EE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIGI | 9 | 48972 | 0 |
| EVV | 6 | 7337 | 0 |
| TILE | 25 | 219119 | 4 |
| NSR | 21 | 134577 | -1 |
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $139 million in EE’s case. Interface, Inc. (NASDAQ:TILE) is the most popular stock in this table. On the other hand Eaton Vance Ltd Duration Income Fund (NYSEMKT:EVV) is the least popular one with only 6 bullish hedge fund positions. El Paso Electric Company (NYSE:EE) 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 TILE might be a better candidate to consider a long position.
