Capital Senior Living Corporation (CSU): Are Hedge Funds Right About This Stock?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Capital Senior Living Corporation (NYSE:CSU) .

Capital Senior Living Corporation (NYSE:CSU) investors should be aware of an increase in hedge fund interest in recent months. CSU was in 17 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with CSU holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Gener8 Maritime Inc (NYSE:GNRT), PROS Holdings, Inc. (NYSE:PRO), and Tredegar Corporation (NYSE:TG) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about Capital Senior Living Corporation (NYSE:CSU)?

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a 13% rise from the second quarter of 2016. On the other hand, there were a total of 21 hedge funds with a bullish position in CSU at the beginning of this year, so even with the recent rise, ownership is still down this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arbiter Partners Capital Management, led by Paul J. Isaac, holds the largest position in Capital Senior Living Corporation (NYSE:CSU). Arbiter Partners Capital Management has a $45.6 million position in the stock, comprising 5.4% of its 13F portfolio. Coming in second is Radix Partners, led by Joshua Packwood and Schuster Tanger, which holds a $31.6 million position; 27.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions encompass Jim Simons’ Renaissance Technologies, Mitch Cantor’s Mountain Lake Investment Management, and George McCabe’s Portolan Capital Management. We should note that two of these hedge funds (Arbiter Partners Capital Management and Mountain Lake Investment Management) are 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, some big names were breaking ground themselves. Cove Street Capital, led by Jeffrey Bronchick, initiated the largest position in Capital Senior Living Corporation (NYSE:CSU). Cove Street Capital had $2.5 million invested in the company at the end of the quarter. Christopher James’ Partner Fund Management also made a $1.9 million investment in the stock during the quarter. The other funds with brand new CSU positions are George Hall’s Clinton Group, Ken Griffin’s Citadel Investment Group, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Capital Senior Living Corporation (NYSE:CSU) but similarly valued. We will take a look at Gener8 Maritime Inc (NYSE:GNRT), PROS Holdings, Inc. (NYSE:PRO), Tredegar Corporation (NYSE:TG), and Clovis Oncology Inc (NASDAQ:CLVS). This group of stocks’ market caps are closest to CSU’s market cap.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $138 million in CSU’s case. Clovis Oncology Inc (NASDAQ:CLVS) is the most popular stock in this table. On the other hand PROS Holdings, Inc. (NYSE:PRO) is the least popular one with only 5 bullish hedge fund positions. Capital Senior Living Corporation (NYSE:CSU) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CLVS might be a better candidate to consider taking a long position in.

Disclosure: None