Small-Cap Hedge Fund Has Large Position In General Moly (GMO)

One of the best ways to make (and lose) a lot of money in the stock market is to try and identify small cap stocks that are on the cusp of becoming much larger companies. One really big win can make up for an awful lot of losers when it comes to the small cap space. A Chicago based hedge-fund with a focus on small-cap equities is making a big bet on one such company. The name of the stock is General Moly GMO, which trades on the American Stock Exchange and is a development-stage company in the business of the exploration, development and mining of properties primarily containing molybdenum. The fact that it is a "development stage company" means high risk/reward. This is exactly the kind of play that could make an investor's year, and maybe a whole lot more. One compelling bit of information about General Moly is the size of one of its largest investors' position relative to other stocks in the hedge fund's portfolio. The fund is Chicago based Coghill Capital Management. Obviously, things could have changed, but as of the end of June, Coghill owned around 8 million GMO shares valued at about $24.5 million. In and of itself, this means little. But when comparing the size of the GMO position to others in the fund's portfolio using publicly available information, one gets the impression that Coghill is very bullish on GMO. Data provided from the 6/30/10 13-F filing for Coghill shows the fund holds around $60 million in long equity positions. The second largest of these stakes was around one third of the size of the GMO stake on a market value basis. This suggests a very high degree of confidence in this small Lakewood, CO company. Investors who bought GMO at the beginning of 2010 have been richly rewarded. The stock has gained 50% during that time period. General Moly is a speculative stock, by any account. The company only has a market cap of $226 million, and is not profitable, but it may be worth a look if Coghill is making such a hefty bet on its prospects.