Hedge Fund Sentiment for Cinemark Holdings, Inc. (CNK) Going Nowhere

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ complex analyses of stocks to determine the best stocks to invest in. A particularly interesting group of stocks is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Hedge fund interest in Cinemark Holdings, Inc. (NYSE:CNK) shares was flat during the last quarter. This is usually a negative indicator. 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 Amsurg Corp (NASDAQ:AMSG), Restoration Hardware Holdings Inc (NYSE:RH), and Sally Beauty Holdings, Inc. (NYSE:SBH) to gather more data points.

According to most traders, hedge funds are perceived as unimportant, old financial vehicles of yesteryear. While there are more than an 8,000 funds trading at the moment, our researchers choose to focus on the elite of this club, approximately 700 funds. These investment experts manage most of the smart money’s total capital, and by tracking their matchless picks, Insider Monkey has figured out several investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s take a peek at the recent action encompassing Cinemark Holdings, Inc. (NYSE:CNK).

Hedge fund activity in Cinemark Holdings, Inc. (NYSE:CNK)

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in Cinemark Holdings, Inc. (NYSE:CNK), worth close to $110.3 million, corresponding to 0.3% of its total 13F portfolio. The second-largest stake is held by John Osterweis of Osterweis Capital Management, with a $62.6 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Phill Gross and Robert Atchinson’s Adage Capital Management, Cliff Asness’ AQR Capital Management, and Greg Poole’s Echo Street Capital Management.

Because Cinemark Holdings, Inc. (NYSE:CNK) has experienced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of funds who sold off their full holdings in the third quarter. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $2.3 million in stock. Bruce Kovner’s fund, Caxton Associates LP, also cut its stock, about $1.6 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Cinemark Holdings, Inc. (NYSE:CNK). We will take a look at Amsurg Corp (NASDAQ:AMSG), Restoration Hardware Holdings Inc (NYSE:RH), Sally Beauty Holdings, Inc. (NYSE:SBH), and Scotts Miracle-Gro Co (NYSE:SMG). This group of stocks’ market valuations are closest to CNK’s market valuation.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $554 million. That figure was $274 million in CNK’s case. Restoration Hardware Holdings Inc (NYSE:RH) is the most popular stock in this table. On the other hand Amsurg Corp (NASDAQ:AMSG) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Cinemark Holdings, Inc. (NYSE:CNK) is even less popular than AMSG. 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.