Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
In today’s marketplace there are a multitude of methods market participants employ to assess their holdings. A duo of the less utilized methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top investment managers can beat the S&P 500 by a very impressive amount (see the details here).
[caption id="attachment_746830" align="aligncenter" width="473"] Matthew Hulsizer of PEAK6 Capital[/caption]
We're going to take a look at the fresh hedge fund action encompassing Blucora Inc (NASDAQ:BCOR).
What does smart money think about Blucora Inc (NASDAQ:BCOR)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the fourth quarter of 2018. By comparison, 14 hedge funds held shares or bullish call options in BCOR a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Blucora Inc (NASDAQ:BCOR), with a stake worth $89.4 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $21 million. Millennium Management, Park West Asset Management, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers have jumped into Blucora Inc (NASDAQ:BCOR) headfirst. Park West Asset Management, managed by Peter S. Park, assembled the most outsized position in Blucora Inc (NASDAQ:BCOR). Park West Asset Management had $10 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $2.3 million investment in the stock during the quarter. The following funds were also among the new BCOR investors: Paul Marshall and Ian Wace's Marshall Wace LLP, Hoon Kim's Quantinno Capital, and Dmitry Balyasny's Balyasny Asset Management.
Let's go over hedge fund activity in other stocks similar to Blucora Inc (NASDAQ:BCOR). We will take a look at Opko Health Inc. (NASDAQ:OPK), Dine Brands Global, Inc. (NYSE:DIN), Sunrun Inc (NASDAQ:RUN), and American Axle & Manufacturing Holdings, Inc. (NYSE:AXL). This group of stocks' market valuations are similar to BCOR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OPK,13,21755,-2 DIN,20,178449,0 RUN,15,305592,-3 AXL,19,126147,-5 Average,16.75,157986,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $138 million in BCOR's case. Dine Brands Global, Inc. (NYSE:DIN) is the most popular stock in this table. On the other hand Opko Health Inc. (NASDAQ:OPK) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Blucora Inc (NASDAQ:BCOR) is even less popular than OPK. Hedge funds dodged a bullet by taking a bearish stance towards BCOR. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately BCOR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); BCOR investors were disappointed as the stock returned -7.3% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.