Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility and underperformance. The time period between the end of June 2015 and the end of June 2016 was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have been underperforming the large-cap indices. However, things have dramatically changed over the last 5 months. Small-cap stocks reversed their misfortune and beat the large cap indices by almost 11 percentage points since the end of June. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Calpine Corporation (NYSE:CPN).
A total of 35 funds tracked by Insider Monkey held shares of Calpine Corporation (NYSE:CPN) at the end of September. During the third quarter, the company registered an increase in popularity among smart money investors, as there had been 32 funds holding shares of the company at the end of June. However, 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 Polaris Industries Inc. (NYSE:PII), Carlyle Group LP (NASDAQ:CG), and Core Laboratories N.V. (NYSE:CLB) to gather more data points.
Follow Calpine Corp (NYSE:CPN)
Follow Calpine Corp (NYSE:CPN)
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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Now, let’s take a peek at the latest action regarding Calpine Corporation (NYSE:CPN).
How have hedgies been trading Calpine Corporation (NYSE:CPN)
As mentioned previously, 35 funds tracked by Insider Monkey were bullish on Calpine Corporation at the end of the third quarter, up by 9% from the end of June. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the number one position in Calpine Corporation (NYSE:CPN). Viking Global has a $267.8 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Clint Carlson’s Carlson Capital, which holds a $158.7 million position; the fund has 2% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise David Einhorn’s Greenlight Capital, Steven Tananbaum’s GoldenTree Asset Management, and Tom Wagner and Ara Cohen’s Knighthead Capital.
Now, specific money managers were breaking ground themselves. Tourbillon Capital Partners, managed by Jason Karp, established the biggest call position in Calpine Corporation (NYSE:CPN). Tourbillon Capital Partners had $20.5 million invested in the company at the end of September. Ken Griffin’s Citadel Investment Group also initiated a $7.9 million position during the quarter. The other funds with new positions in the stock are Jody LaNasa’s Serengeti Asset Management, Robert Polak’s Anchor Bolt Capital, and Leon Shaulov’s Maplelane Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Calpine Corporation (NYSE:CPN) but similarly valued. We will take a look at Polaris Industries Inc. (NYSE:PII), Carlyle Group LP (NASDAQ:CG), Core Laboratories N.V. (NYSE:CLB), and Douglas Emmett, Inc. (NYSE:DEI). This group of stocks’ market caps match CPN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PII | 12 | 75063 | -5 |
| CG | 11 | 90845 | 1 |
| CLB | 22 | 145268 | 1 |
| DEI | 5 | 63268 | -1 |
As you can see these stocks had an average of 13 investors that reported long positions in the stock and the average amount invested in these stocks was $94 million, significantly lower compared to the $837 million figure in CPN’s case. Core Laboratories N.V. (NYSE:CLB) is the most popular stock in this table. On the other hand Douglas Emmett, Inc. (NYSE:DEI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Calpine Corporation (NYSE:CPN) 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.
