We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Cannae Holdings, Inc. (NYSE:CNNE) and determine whether hedge funds skillfully traded this stock.
Cannae Holdings, Inc. (NYSE:CNNE) was in 35 hedge funds’ portfolios at the end of September. The all time high for this statistic is 43. CNNE investors should be aware of an increase in hedge fund interest of late. There were 34 hedge funds in our database with CNNE holdings at the end of June. Our calculations also showed that CNNE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Nathaniel August of Mangrove Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s go over the recent hedge fund action surrounding Cannae Holdings, Inc. (NYSE:CNNE).
Do Hedge Funds Think CNNE Is A Good Stock To Buy Now?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in CNNE a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Nitorum Capital was the largest shareholder of Cannae Holdings, Inc. (NYSE:CNNE), with a stake worth $106.3 million reported as of the end of September. Trailing Nitorum Capital was Empyrean Capital Partners, which amassed a stake valued at $59 million. Eminence Capital, D E Shaw, and Azora Capital 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 Nitorum Capital allocated the biggest weight to Cannae Holdings, Inc. (NYSE:CNNE), around 5.05% of its 13F portfolio. Bayberry Capital Partners is also relatively very bullish on the stock, dishing out 4.29 percent of its 13F equity portfolio to CNNE.
Consequently, key money managers have been driving this bullishness. Centiva Capital, managed by Karim Abbadi and Edward McBride, assembled the most outsized position in Cannae Holdings, Inc. (NYSE:CNNE). Centiva Capital had $7.6 million invested in the company at the end of the quarter. Nathaniel August’s Mangrove Partners also made a $6.3 million investment in the stock during the quarter. The following funds were also among the new CNNE investors: Prem Watsa’s Fairfax Financial Holdings, Greg Eisner’s Engineers Gate Manager, and Ran Pang’s Quantamental Technologies.
Let’s also examine hedge fund activity in other stocks similar to Cannae Holdings, Inc. (NYSE:CNNE). These stocks are United States Cellular Corporation (NYSE:USM), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), GrafTech International Ltd. (NYSE:EAF), CVB Financial Corp. (NASDAQ:CVBF), Sharecare Inc. (NASDAQ:SHCR), Advantage Solutions Inc. (NASDAQ:ADV), and Live Oak Bancshares Inc (NASDAQ:LOB). This group of stocks’ market values are closest to CNNE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USM | 9 | 72313 | 1 |
| KTOS | 15 | 232817 | -3 |
| EAF | 31 | 247108 | -5 |
| CVBF | 18 | 50453 | 5 |
| SHCR | 10 | 60480 | 10 |
| ADV | 20 | 370785 | -4 |
| LOB | 10 | 87812 | -1 |
| Average | 16.1 | 160253 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $446 million in CNNE’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand United States Cellular Corporation (NYSE:USM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Cannae Holdings, Inc. (NYSE:CNNE) is more popular among hedge funds. Our overall hedge fund sentiment score for CNNE is 80.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, CNNE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CNNE were disappointed as the stock returned -4% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Cannae Holdings Inc. (NYSE:CNNE)
Follow Cannae Holdings Inc. (NYSE:CNNE)
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Disclosure: None. This article was originally published at Insider Monkey.
