Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Colfax Corporation (NYSE:CFX) based on that data.
Is Colfax Corporation (NYSE:CFX) a buy, sell, or hold? The smart money was getting less optimistic. The number of bullish hedge fund positions dropped by 8 recently. Colfax Corporation (NYSE:CFX) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 49. Our calculations also showed that CFX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Chuck Royce of Royce & Associates
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 check out the recent hedge fund action surrounding Colfax Corporation (NYSE:CFX).
Do Hedge Funds Think CFX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CFX over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Southpoint Capital Advisors was the largest shareholder of Colfax Corporation (NYSE:CFX), with a stake worth $171.2 million reported as of the end of September. Trailing Southpoint Capital Advisors was Eminence Capital, which amassed a stake valued at $169.8 million. Cardinal Capital, Royce & Associates, and Markel Gayner Asset 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 Cove Street Capital allocated the biggest weight to Colfax Corporation (NYSE:CFX), around 4.69% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, earmarking 3.95 percent of its 13F equity portfolio to CFX.
Because Colfax Corporation (NYSE:CFX) has witnessed bearish sentiment from hedge fund managers, logic holds that there was a specific group of money managers that elected to cut their positions entirely last quarter. Intriguingly, Matthew Stadelman’s Diamond Hill Capital sold off the biggest investment of the 750 funds tracked by Insider Monkey, totaling about $206.4 million in stock, and Alec Litowitz and Ross Laser’s Magnetar Capital was right behind this move, as the fund cut about $22.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 8 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Colfax Corporation (NYSE:CFX) but similarly valued. We will take a look at nCino, Inc. (NASDAQ:NCNO), Frontier Communications Parent Inc. (NASDAQ:FYBR), Ritchie Bros. Auctioneers (NYSE:RBA), Thor Industries, Inc. (NYSE:THO), Medpace Holdings, Inc. (NASDAQ:MEDP), Kinross Gold Corporation (NYSE:KGC), and TopBuild Corp (NYSE:BLD). This group of stocks’ market values match CFX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NCNO | 21 | 582525 | -4 |
| FYBR | 43 | 3539483 | 0 |
| RBA | 13 | 277550 | -9 |
| THO | 29 | 174266 | 3 |
| MEDP | 23 | 424211 | -1 |
| KGC | 27 | 321000 | -1 |
| BLD | 17 | 93609 | -5 |
| Average | 24.7 | 773235 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $773 million. That figure was $819 million in CFX’s case. Frontier Communications Parent Inc. (NASDAQ:FYBR) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers (NYSE:RBA) is the least popular one with only 13 bullish hedge fund positions. Colfax Corporation (NYSE:CFX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CFX is 27.7. 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately CFX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CFX investors were disappointed as the stock returned -0.2% since the end of September (through 12/9) 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.
