While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH).
ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH) has experienced a decrease in activity from the world’s largest hedge funds recently. CCIH was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. There were 11 hedge funds in our database with CCIH holdings at the end of the previous quarter. 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 TeleCommunication Systems, Inc. (NASDAQ:TSYS), Tilly’s Inc (NYSE:TLYS), and Capitala Finance Corp (NASDAQ:CPTA) to gather more data points.
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To most traders, hedge funds are seen as unimportant, old investment tools of the past. While there are over 8000 funds in operation today, We look at the elite of this group, about 700 funds. These hedge fund managers oversee bulk of all hedge funds’ total asset base, and by tailing their unrivaled equity investments, Insider Monkey has brought to light a few investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, let’s analyze the recent action regarding ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH).
What have hedge funds been doing with ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -64% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Keywise Capital Management, managed by Fang Zheng, holds the biggest position in ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH). Keywise Capital Management has a $3 million position in the stock, comprising 5.3% of its 13F portfolio. Coming in second is D E Shaw, led by D. E. Shaw, holding a $0.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Brian Taylor’s Pine River Capital Management, and Ken Griffin’s Citadel Investment Group.
Seeing as ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH) has faced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of funds that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Brian Ashford-Russell and Tim Woolley’s Polar Capital dumped the biggest position of all the hedgies monitored by Insider Monkey, totaling about $2.8 million in stock, and Eric Semler’s TCS Capital Management was right behind this move, as the fund sold off about $2 million worth. These moves are important to note, as total hedge fund interest dropped by 7 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH) but similarly valued. These stocks are TeleCommunication Systems, Inc. (NASDAQ:TSYS), Tilly’s Inc (NYSE:TLYS), Capitala Finance Corp (NASDAQ:CPTA), and Kopin Corporation (NASDAQ:KOPN). All of these stocks’ market caps resemble CCIH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSYS | 12 | 41010 | -1 |
| TLYS | 8 | 6551 | -1 |
| CPTA | 4 | 1709 | -1 |
| KOPN | 6 | 29140 | -1 |
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $5 million in CCIH’s case. TeleCommunication Systems, Inc. (NASDAQ:TSYS) is the most popular stock in this table. On the other hand Capitala Finance Corp (NASDAQ:CPTA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH) is as less popular as CPTA. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
