A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Crescent Point Energy Corp (NYSE:CPG) during the quarter.
Crescent Point Energy Corp (NYSE:CPG) investors should be aware of an increase in hedge fund sentiment recently. 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 Avnet, Inc. (NYSE:AVT), United Rentals, Inc. (NYSE:URI), and Tableau Software Inc (NYSE:DATA) to gather more data points.
In today’s marketplace there are dozens of metrics stock traders employ to evaluate stocks. A duo of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the market by a healthy amount (see the details here).
With all of this in mind, we’re going to take a glance at the new action surrounding Crescent Point Energy Corp (NYSE:CPG).
What does the smart money think about Crescent Point Energy Corp (NYSE:CPG)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the second quarter. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, holds the largest position in Crescent Point Energy Corp (NYSE:CPG). Waratah Capital Advisors has a $30.7 million position in the stock, comprising 6.5% of its 13F portfolio. Coming in second is Vertex One Asset Management, managed by John Thiessen, which holds a $22.8 million position; 3.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish consist of Eric Sprott’s Sprott Asset Management and Cliff Asness’s AQR Capital Management.
As one would reasonably expect, specific money managers were breaking ground themselves. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, assembled the largest position in Crescent Point Energy Corp (NYSE:CPG). Waratah Capital Advisors had $30.7 million invested in the company at the end of the quarter. Vertex One Asset Management also initiated its position during the quarter. The other funds with new positions in the stock are Vince Maddi and Shawn Brennan’s SIR Capital Management, Steve Cohen’s Point72 Asset Management, and Noam Gottesman’s GLG Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Crescent Point Energy Corp (NYSE:CPG) but similarly valued. These stocks are Avnet, Inc. (NYSE:AVT), United Rentals, Inc. (NYSE:URI), Tableau Software Inc (NYSE:DATA), and Commscope Holding Company Inc (NASDAQ:COMM). All of these stocks’ market caps resemble CPG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVT | 31 | 782334 | 4 |
| URI | 52 | 782952 | 8 |
| DATA | 45 | 1154797 | 6 |
| COMM | 41 | 2006967 | 3 |
As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $1.18 billion, versus just $90 million in CPG’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table, while Avnet, Inc. (NYSE:AVT) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Crescent Point Energy Corp (NYSE:CPG) is even less popular than AVT. 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 required.