Do Hedge Funds Love Casey’s General Stores, Inc. (CASY)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Casey’s General Stores, Inc. (NASDAQ:CASY) based on that data.

Casey’s General Stores, Inc. (NASDAQ:CASY) was in 23 hedge funds’ portfolios at the end of the first quarter of 2020. CASY shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 22 hedge funds in our database with CASY positions at the end of the previous quarter. Our calculations also showed that CASY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the recent hedge fund action regarding Casey’s General Stores, Inc. (NASDAQ:CASY).

What have hedge funds been doing with Casey’s General Stores, Inc. (NASDAQ:CASY)?

At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in CASY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Casey’s General Stores, Inc. (NASDAQ:CASY), which was worth $48.1 million at the end of the third quarter. On the second spot was Valinor Management LLC which amassed $44.5 million worth of shares. Millennium Management, Rip Road Capital, and Winton Capital 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 Rip Road Capital allocated the biggest weight to Casey’s General Stores, Inc. (NASDAQ:CASY), around 6.01% of its 13F portfolio. Valinor Management LLC is also relatively very bullish on the stock, earmarking 3.98 percent of its 13F equity portfolio to CASY.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Valinor Management LLC, managed by David Gallo, established the largest position in Casey’s General Stores, Inc. (NASDAQ:CASY). Valinor Management LLC had $44.5 million invested in the company at the end of the quarter. Dennis Goldstein’s Rip Road Capital also initiated a $9.1 million position during the quarter. The other funds with new positions in the stock are  Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Peter Muller’s PDT Partners.

Let’s also examine hedge fund activity in other stocks similar to Casey’s General Stores, Inc. (NASDAQ:CASY). We will take a look at Acceleron Pharma Inc (NASDAQ:XLRN), Reata Pharmaceuticals, Inc. (NASDAQ:RETA), People’s United Financial, Inc. (NASDAQ:PBCT), and Steel Dynamics, Inc. (NASDAQ:STLD). This group of stocks’ market valuations resemble CASY’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $159 million in CASY’s case. Acceleron Pharma Inc (NASDAQ:XLRN) is the most popular stock in this table. On the other hand People’s United Financial, Inc. (NASDAQ:PBCT) is the least popular one with only 22 bullish hedge fund positions. Casey’s General Stores, Inc. (NASDAQ:CASY) 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately CASY wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CASY investors were disappointed as the stock returned 18.3% 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.

Disclosure: None. This article was originally published at Insider Monkey.