Jamie Zimmerman’s Best Stock Picks: Macquarie Infrastructure Comp

by alexoscarew | January 16, 2013 at 08:38 am

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Small-cap stocks don’t get as much attention from most players in the financial world, which often renders them less efficiently priced than larger stocks. As can probably be expected, hedge funds take advantage of this differential, and hence, generate a significant portion of their alpha from the small-caps.

At Insider Monkey, we started publishing a quarterly newsletter at the end of August that follows hedge funds’ top small-cap picks. Since that point, until the end of last month, this strategy returned a 14.3% versus 2.1% for the S&P 500 index (learn more about our small-cap strategy). We've also backtested this analysis, and have found that hedge funds’ top small-cap picks have generated an alpha of about 120 basis points per month.