With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Cadiz Inc (NASDAQ:CDZI).
Cadiz Inc (NASDAQ:CDZI) shareholders have witnessed an increase in hedge fund interest recently. Cadiz Inc (NASDAQ:CDZI) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 14. Our calculations also showed that CDZI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the new hedge fund action regarding Cadiz Inc (NASDAQ:CDZI).
Do Hedge Funds Think CDZI Is A Good Stock To Buy Now?
At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the first quarter of 2020. On the other hand, there were a total of 9 hedge funds with a bullish position in CDZI a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Cadiz Inc (NASDAQ:CDZI) was held by Elkhorn Partners, which reported holding $2.6 million worth of stock at the end of June. It was followed by Renaissance Technologies with a $2 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Elkhorn Partners allocated the biggest weight to Cadiz Inc (NASDAQ:CDZI), around 1.61% of its 13F portfolio. Algert Global is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to CDZI.
Consequently, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in Cadiz Inc (NASDAQ:CDZI). Marshall Wace LLP had $1.1 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $0.1 million investment in the stock during the quarter. The only other fund with a brand new CDZI position is Matthew L Pinz’s Pinz Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cadiz Inc (NASDAQ:CDZI) but similarly valued. We will take a look at Mogo Inc. (NASDAQ:MOGO), Mechel PAO (NYSE:MTL), iHuman Inc. (NYSE:IH), Arlo Technologies, Inc. (NYSE:ARLO), CleanSpark, Inc. (NASDAQ:CLSK), TETRA Technologies, Inc. (NYSE:TTI), and Barrett Business Services, Inc. (NASDAQ:BBSI). This group of stocks’ market values are similar to CDZI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOGO | 7 | 28836 | -1 |
| MTL | 9 | 6537 | 6 |
| IH | 2 | 719 | 1 |
| ARLO | 17 | 47992 | -1 |
| CLSK | 4 | 11877 | -4 |
| TTI | 19 | 38071 | -3 |
| BBSI | 13 | 50506 | 4 |
| Average | 10.1 | 26363 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.1 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $9 million in CDZI’s case. TETRA Technologies, Inc. (NYSE:TTI) is the most popular stock in this table. On the other hand iHuman Inc. (NYSE:IH) is the least popular one with only 2 bullish hedge fund positions. Cadiz Inc (NASDAQ:CDZI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CDZI is 51. 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. 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 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately CDZI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CDZI investors were disappointed as the stock returned -47.8% since the end of June (through 9/27) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
