The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Calavo Growers, Inc. (NASDAQ:CVGW) from the perspective of those successful funds.
Calavo Growers, Inc. (NASDAQ:CVGW) has seen an increase in hedge fund interest recently. CVGW was in 18 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with CVGW positions at the end of the previous quarter. At the end of this article we will also compare CVGW to other stocks including Astronics Corporation (NASDAQ:ATRO), Q2 Holdings Inc (NYSE:QTWO), and Tennant Company (NYSE:TNC) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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What have hedge funds been doing with Calavo Growers, Inc. (NASDAQ:CVGW)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 38% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in CVGW at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, SG Capital Management, led by Ken Grossman and Glen Schneider, holds the biggest position in Calavo Growers, Inc. (NASDAQ:CVGW). SG Capital Management has a $18 million position in the stock, comprising 5.1% of its 13F portfolio. On SG Capital Management’s heels is Millennium Management, which holds a $14.2 million position. Remaining hedge funds and institutional investors that are bullish comprise Richard Driehaus’ Driehaus Capital, Jim Simons’ Renaissance Technologies and Joseph A. Jolson’s Harvest Capital Strategies. We should note that SG Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now, key hedge funds have jumped into Calavo Growers, Inc. (NASDAQ:CVGW) headfirst. Gotham Asset Management, led by Joel Greenblatt, established the biggest position in Calavo Growers, Inc. (NASDAQ:CVGW). Gotham Asset Management had $0.9 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Paul Tudor Jones’s Tudor Investment Corp, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks similar to Calavo Growers, Inc. (NASDAQ:CVGW). We will take a look at Astronics Corporation (NASDAQ:ATRO), Q2 Holdings Inc (NYSE:QTWO), Tennant Company (NYSE:TNC), and Super Micro Computer, Inc. (NASDAQ:SMCI). This group of stocks’ market valuations are closest to CVGW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATRO | 9 | 15129 | 1 |
| QTWO | 12 | 36339 | -2 |
| TNC | 10 | 117320 | -2 |
| SMCI | 13 | 49744 | 3 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $59 million in CVGW’s case. Super Micro Computer, Inc. (NASDAQ:SMCI) is the most popular stock in this table. On the other hand Astronics Corporation (NASDAQ:ATRO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Calavo Growers, Inc. (NASDAQ:CVGW) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
