Billionaire hedge fund managers such as 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.
Telaria, Inc. (NYSE:TLRA) investors should pay attention to an increase in hedge fund interest through the end of September. Edenbrook Capital also reported buying nearly 400K shares in early October for as little as $2.21 a share. Our calculations also showed that TLRA isn't among the 30 most popular stocks among hedge funds but this isn't uncommon for a small-cap stock. In this article we will compare TLRA to similarly valued stocks such as Bank of Commerce Holdings (NASDAQ:BOCH), Gladstone Land Corporation (NASDAQ:LAND), Hallmark Financial Services, Inc. (NASDAQ:HALL), and Clearside Biomedical, Inc. (NASDAQ:CLSD) and determine which one is favored by hedge funds.
If you'd ask most market participants, hedge funds are assumed to be slow, outdated investment vehicles of the past. While there are greater than 8000 funds trading at present, We hone in on the aristocrats of this club, about 700 funds. These hedge fund managers preside over the lion's share of all hedge funds' total asset base, and by observing their unrivaled equity investments, Insider Monkey has figured out a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
We're going to go over the recent hedge fund action encompassing Telaria, Inc. (NYSE:TLRA).
What have hedge funds been doing with Telaria, Inc. (NYSE:TLRA)?
At Q3's end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in TLRA at the beginning of this year. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Telaria, Inc. (NYSE:TLRA), with a stake worth $8 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $6.5 million. Arrowstreet Capital, Ancora Advisors, and Steamboat Capital Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Now, specific money managers have been driving this bullishness. Steamboat Capital Partners, managed by Parsa Kiai, initiated the largest position in Telaria, Inc. (NYSE:TLRA). Steamboat Capital Partners had $0.5 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Telaria, Inc. (NYSE:TLRA) but similarly valued. These stocks are Bank of Commerce Holdings (NASDAQ:BOCH), Gladstone Land Corporation (NASDAQ:LAND), Hallmark Financial Services, Inc. (NASDAQ:HALL), and Clearside Biomedical, Inc. (NASDAQ:CLSD). This group of stocks' market caps are closest to TLRA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BOCH,5,23165,1 LAND,3,6298,1 HALL,6,38081,-1 CLSD,15,19392,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $18 million in TLRA's case. Clearside Biomedical, Inc. (NASDAQ:CLSD) is the most popular stock in this table. On the other hand Gladstone Land Corporation (NASDAQ:LAND) is the least popular one with only 3 bullish hedge fund positions. Telaria, Inc. (NYSE:TLRA) 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 CLSD might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.