The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Cronos Group Inc. (NASDAQ:CRON) and determine whether the smart money was really smart about this stock.
Cronos Group Inc. (NASDAQ:CRON) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of March. At the end of this article we will also compare CRON to other stocks including Ryman Hospitality Properties, Inc. (NYSE:RHP), ESCO Technologies Inc. (NYSE:ESE), and South State Corporation (NASDAQ:SSB) to get a better sense of its popularity.
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According to most traders, hedge funds are viewed as underperforming, outdated investment tools of the past. While there are over 8000 funds in operation today, Our experts look at the upper echelon of this group, around 850 funds. These money managers orchestrate the majority of the hedge fund industry’s total asset base, and by paying attention to their finest stock picks, Insider Monkey has spotted various investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the new hedge fund action surrounding Cronos Group Inc. (NASDAQ:CRON).
How are hedge funds trading Cronos Group Inc. (NASDAQ:CRON)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CRON over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Chescapmanager LLC held the most valuable stake in Cronos Group Inc. (NASDAQ:CRON), which was worth $50.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $9.3 million worth of shares. Citadel Investment Group, Citadel Investment Group, and OZ Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Chescapmanager LLC allocated the biggest weight to Cronos Group Inc. (NASDAQ:CRON), around 13.02% of its 13F portfolio. Valinor Management LLC is also relatively very bullish on the stock, earmarking 0.24 percent of its 13F equity portfolio to CRON.
Because Cronos Group Inc. (NASDAQ:CRON) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few fund managers who sold off their full holdings in the first quarter. At the top of the heap, James Thomas Berylson’s Berylson Capital Partners dropped the largest stake of all the hedgies tracked by Insider Monkey, comprising about $4.2 million in stock. Eli Samaha’s fund, Madison Avenue Partners, also dropped its stock, about $3.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Cronos Group Inc. (NASDAQ:CRON). We will take a look at Ryman Hospitality Properties, Inc. (NYSE:RHP), ESCO Technologies Inc. (NYSE:ESE), South State Corporation (NASDAQ:SSB), and Alamos Gold Inc (NYSE:AGI). This group of stocks’ market values match CRON’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RHP | 26 | 266783 | -4 |
| ESE | 8 | 59966 | -1 |
| SSB | 12 | 77340 | -3 |
| AGI | 19 | 234083 | 3 |
| Average | 16.25 | 159543 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $73 million in CRON’s case. Ryman Hospitality Properties, Inc. (NYSE:RHP) is the most popular stock in this table. On the other hand ESCO Technologies Inc. (NYSE:ESE) is the least popular one with only 8 bullish hedge fund positions. Cronos Group Inc. (NASDAQ:CRON) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately CRON wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CRON investors were disappointed as the stock returned 6% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
