5 Small Caps That Hedge Funds Love

A look at the potential boomer stocks favored by the 'smart money'

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5 Small Caps That Hedge Funds Love

#1: Radian Group

Radian185 5 Small Caps That Hedge Funds LoveChange in investment from last quarter: +$115.8 million
Total hedge fund investment vs. market cap:
$153.6 million of $2.5 billion
YTD returns: 100%

Radian Group (RDN) topped all small-cap investments with $115.83 million worth of shares purchased during the past quarter, representing about 6.3% of the company’s market cap.

Radian, a “credit enhancement company” that also operates in mortgage insurance like MTIG, has had problems with profitability lately. But it, too, is in the right place at the right time as the housing market recovers and bad mortgages work their way out of the system. Financial stocks are much stricter about lending standards, and that has allowed for fewer defaults in recent years.

Just take care after the big run-up. And remember that hedge fund buying power works both ways — it can boost stocks with buys, but also weigh on stocks when the smart money sells.

Check out additional hedge fund resources on NerdWallet:

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2013/07/5-small-caps-that-hedge-funds-love/.

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