We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Catchmark Timber Trust Inc (NYSE:CTT).
Is Catchmark Timber Trust Inc (NYSE:CTT) a good investment now? The smart money is taking a bullish view. The number of bullish hedge fund positions went up by 2 lately. Our calculations also showed that CTT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CTT was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with CTT positions at the end of the previous quarter.
Video: Click the image to 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 hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s review the latest hedge fund action encompassing Catchmark Timber Trust Inc (NYSE:CTT).
How have hedgies been trading Catchmark Timber Trust Inc (NYSE:CTT)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in CTT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the most valuable position in Catchmark Timber Trust Inc (NYSE:CTT). Renaissance Technologies has a $35 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Impax Asset Management, led by Ian Simm, holding a $9.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish include Israel Englander’s Millennium Management, Chuck Royce’s Royce & Associates and Mark Coe’s Intrinsic Edge Capital. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Catchmark Timber Trust Inc (NYSE:CTT), around 0.41% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, dishing out 0.23 percent of its 13F equity portfolio to CTT.
As one would reasonably expect, key money managers were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, established the most outsized position in Catchmark Timber Trust Inc (NYSE:CTT). Intrinsic Edge Capital had $3.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2.3 million position during the quarter. The only other fund with a brand new CTT position is David Harding’s Winton Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Catchmark Timber Trust Inc (NYSE:CTT). These stocks are FutureFuel Corp. (NYSE:FF), Ituran Location and Control Ltd. (US) (NASDAQ:ITRN), International Money Express, Inc. (NASDAQ:IMXI), and Heidrick & Struggles International, Inc. (NASDAQ:HSII). This group of stocks’ market values resemble CTT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FF | 10 | 45499 | -1 |
| ITRN | 11 | 95048 | -2 |
| IMXI | 14 | 96639 | 2 |
| HSII | 14 | 97655 | 1 |
| Average | 12.25 | 83710 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $64 million in CTT’s case. International Money Express, Inc. (NASDAQ:IMXI) is the most popular stock in this table. On the other hand FutureFuel Corp. (NYSE:FF) is the least popular one with only 10 bullish hedge fund positions. Catchmark Timber Trust Inc (NYSE:CTT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on CTT as the stock returned 12.6% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
