Is CTS Corporation (NYSE:CTS) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is CTS Corporation (NYSE:CTS) worth your attention right now? Hedge funds are getting more bullish. The number of bullish hedge fund bets increased by 1 recently. Our calculations also showed that CTS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are plenty of signals market participants put to use to size up publicly traded companies. A couple of the most innovative signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the broader indices by a solid margin (see the details here).
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. We’re going to analyze the fresh hedge fund action regarding CTS Corporation (NYSE:CTS).
Hedge fund activity in CTS Corporation (NYSE:CTS)
Heading into the fourth quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in CTS over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, GAMCO Investors held the most valuable stake in CTS Corporation (NYSE:CTS), which was worth $67.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $8.2 million worth of shares. D E Shaw, AQR Capital Management, and Citadel Investment Group 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 GAMCO Investors allocated the biggest weight to CTS Corporation (NYSE:CTS), around 0.56% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.38 percent of its 13F equity portfolio to CTS.
With a general bullishness amongst the heavyweights, specific money managers have jumped into CTS Corporation (NYSE:CTS) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in CTS Corporation (NYSE:CTS). Arrowstreet Capital had $1.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors and Donald Sussman’s Paloma Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CTS Corporation (NYSE:CTS) but similarly valued. These stocks are National Bank Holdings Corp (NYSE:NBHC), K12 Inc. (NYSE:LRN), Hess Midstream Partners LP (NYSE:HESM), and SecureWorks Corp. (NASDAQ:SCWX). This group of stocks’ market valuations resemble CTS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NBHC | 11 | 78989 | 1 |
| LRN | 17 | 133604 | -5 |
| HESM | 7 | 9217 | 1 |
| SCWX | 9 | 18937 | 0 |
| Average | 11 | 60187 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $86 million in CTS’s case. K12 Inc. (NYSE:LRN) is the most popular stock in this table. On the other hand Hess Midstream Partners LP (NYSE:HESM) is the least popular one with only 7 bullish hedge fund positions. CTS Corporation (NYSE:CTS) is not the least popular stock in this group but hedge fund interest is still below average. 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 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. Unfortunately CTS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CTS investors were disappointed as the stock returned -15.4% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
