Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won't accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Macquarie Infrastructure Corporation (NYSE:MIC) was in 28 hedge funds' portfolios at the end of the fourth quarter of 2018. MIC shareholders have witnessed an increase in hedge fund sentiment lately. There were 25 hedge funds in our database with MIC holdings at the end of the previous quarter. Our calculations also showed that mic isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a gander at the recent hedge fund action surrounding Macquarie Infrastructure Corporation (NYSE:MIC).
How are hedge funds trading Macquarie Infrastructure Corporation (NYSE:MIC)?
At Q4's end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MIC over the last 14 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Carlson Capital held the most valuable stake in Macquarie Infrastructure Corporation (NYSE:MIC), which was worth $49.4 million at the end of the third quarter. On the second spot was GAMCO Investors which amassed $35.7 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and Selz Capital were also bullish on Macquarie Infrastructure Corporation (NYSE:MIC), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds have jumped into Macquarie Infrastructure Corporation (NYSE:MIC) headfirst. JHL Capital Group, managed by James H. Litinsky, established the most valuable position in Macquarie Infrastructure Corporation (NYSE:MIC). JHL Capital Group had $14.6 million invested in the company at the end of the quarter. George Baxter's Sabrepoint Capital also initiated a $4.4 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Nick Niell's Arrowgrass Capital Partners, and Steve Cohen's Point72 Asset Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Macquarie Infrastructure Corporation (NYSE:MIC) but similarly valued. These stocks are Cushman & Wakefield plc (NYSE:CWK), Manchester United PLC (NYSE:MANU), Azul S.A. (NYSE:AZUL), and NovoCure Limited (NASDAQ:NVCR). This group of stocks' market caps are similar to MIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CWK,13,142027,-2 MANU,9,61678,1 AZUL,11,145148,0 NVCR,17,218712,-3 Average,12.5,141891,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $243 million in MIC's case. NovoCure Limited (NASDAQ:NVCR) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Macquarie Infrastructure Corporation (NYSE:MIC) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MIC wasn't nearly as popular as these 15 stock and hedge funds that were betting on MIC were disappointed as the stock returned 14.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.