A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Central Garden & Pet Co (NASDAQ:CENT).
Is Central Garden & Pet Co (NASDAQ:CENT) a healthy stock for your portfolio? The smart money is in a bullish mood. The number of long hedge fund bets moved up by 1 recently. Our calculations also showed that CENT isn’t among the 30 most popular stocks among hedge funds. CENT was in 20 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with CENT holdings at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to view the key hedge fund action encompassing Central Garden & Pet Co (NASDAQ:CENT).
What does the smart money think about Central Garden & Pet Co (NASDAQ:CENT)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CENT over the last 13 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Central Garden & Pet Co (NASDAQ:CENT) was held by Renaissance Technologies, which reported holding $44.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $27.9 million position. Other investors bullish on the company included CQS Cayman LP, D E Shaw, and Millennium Management.
As aggregate interest increased, some big names were breaking ground themselves. Echo Street Capital Management, managed by Greg Poole, established the most valuable position in Central Garden & Pet Co (NASDAQ:CENT). Echo Street Capital Management had $6.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new CENT investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew Halbower’s Pentwater Capital Management, and Ira Unschuld’s Brant Point Investment Management.
Let’s now take a look at hedge fund activity in other stocks similar to Central Garden & Pet Co (NASDAQ:CENT). These stocks are Denali Therapeutics Inc. (NASDAQ:DNLI), LegacyTexas Financial Group Inc (NASDAQ:LTXB), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), and The Navigators Group, Inc (NASDAQ:NAVG). All of these stocks’ market caps match CENT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNLI | 4 | 8928 | 1 |
| LTXB | 14 | 70644 | 2 |
| MNTA | 18 | 300848 | 1 |
| NAVG | 17 | 193595 | 5 |
| Average | 13.25 | 143504 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $158 million in CENT’s case. Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) is the most popular stock in this table. On the other hand Denali Therapeutics Inc. (NASDAQ:DNLI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Central Garden & Pet Co (NASDAQ:CENT) 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. This article was originally published at Insider Monkey.
