Is Credit Acceptance Corp. (NASDAQ:CACC) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments. For example the 15 most popular small-cap stocks among hedge funds outstripped the S&P 500 index by 12 percentage points per year for more than a decade in our back tests.
Credit Acceptance Corp. (NASDAQ:CACC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of September. 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 Spirit Realty Capital Inc (NYSE:SRC), Phillips 66 Partners LP (NYSE:PSXP), and Endurance Specialty Holdings Ltd. (NYSE:ENH) to gather more data points.
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What does the smart money think about Credit Acceptance Corp. (NASDAQ:CACC)?
Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, BloombergSen, managed by Jonathan Bloomberg, holds the largest position in Credit Acceptance Corp. (NASDAQ:CACC). BloombergSen has an $190.3 million position in the stock, comprising 10.7% of its 13F portfolio. Sitting at the No. 2 spot is Abrams Bison Investments, led by Gavin M. Abrams, holding an $104.1 million position; 11.4% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish encompass William von Mueffling’s Cantillon Capital Management, Jim Simons’ Renaissance Technologies and Edward Goodnow’s Goodnow Investment Group.
Seeing as Credit Acceptance Corp. (NASDAQ:CACC) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies who were dropping their full holdings last quarter. Interestingly, Matthew Hulsizer’s PEAK6 Capital Management dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $5.9 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund cut about $2.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to Credit Acceptance Corp. (NASDAQ:CACC). These stocks are Spirit Realty Capital Inc (NYSE:SRC), Phillips 66 Partners LP (NYSE:PSXP), Endurance Specialty Holdings Ltd. (NYSE:ENH), and Cullen/Frost Bankers, Inc. (NYSE:CFR). This group of stocks’ market valuations are closest to CACC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRC | 25 | 337403 | 5 |
| PSXP | 7 | 25554 | 1 |
| ENH | 22 | 227523 | 7 |
| CFR | 15 | 51427 | 4 |
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $160 million, below the $529 million figure in CACC’s case. Spirit Realty Capital Inc (NYSE:SRC) is the most popular stock in this table with 25 funds reporting stakes, while Phillips 66 Partners LP (NYSE:PSXP) is the least popular one. Credit Acceptance Corp. (NASDAQ:CACC) 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 SRC might be a better candidate to consider a long position.
