It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark.
Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Heritage-Crystal Clean, Inc. (NASDAQ:HCCI).
Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) has seen an increase in enthusiasm from smart money recently. There were 4 hedge funds in our database with HCCI positions at the end of the previous quarter. At the end of this article we will also compare HCCI to other stocks including Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), Mazor Robotics Ltd – ADR (NASDAQ:MZOR), and Fogo de Chao Inc (NASDAQ:FOGO) to get a better sense of its popularity.
Follow Heritage-Crystal Clean Inc. (NASDAQ:HCCI)
Follow Heritage-Crystal Clean Inc. (NASDAQ:HCCI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, we’re going to take a look at the latest action surrounding Heritage-Crystal Clean, Inc. (NASDAQ:HCCI).
What have hedge funds been doing with Heritage-Crystal Clean, Inc. (NASDAQ:HCCI)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a boost of 50% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards HCCI over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Jeffrey Bronchick’s Cove Street Capital has the biggest position in Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), worth close to $36 million, corresponding to 3.9% of its total 13F portfolio. On Cove Street Capital’s heels is Royce & Associates, led by Chuck Royce, which holds a $12.4 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish include Renaissance Technologies, one of the biggest hedge funds in the world, John Overdeck and David Siegel’s Two Sigma Advisors and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds have been driving this bullishness. Jeffrey Bronchick’s Cove Street Capital initiated the most outsized position in Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), followed by John Overdeck and David Siegel’s Two Sigma Advisors. According to its latest 13F filing, the fund initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) but similarly valued. We will take a look at Corbus Pharmaceuticals Holdings Inc (NASDAQ:CRBP), Mazor Robotics Ltd – ADR (NASDAQ:MZOR), Fogo de Chao Inc (NASDAQ:FOGO), and Citi Trends, Inc. (NASDAQ:CTRN). This group of stocks’ market values are similar to HCCI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRBP | 5 | 51279 | -2 |
| MZOR | 5 | 29463 | 0 |
| FOGO | 4 | 16469 | -2 |
| CTRN | 13 | 46528 | 4 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $50 million in HCCI’s case. Citi Trends, Inc. (NASDAQ:CTRN) is the most popular stock in this table. On the other hand Fogo de Chao Inc (NASDAQ:FOGO) is the least popular one with only 4 bullish hedge fund positions. Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) 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. In this regard CTRN might be a better candidate to consider taking a long position in.
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Disclosure: None
