The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Cannae Holdings, Inc. (NYSE:CNNE).
Cannae Holdings, Inc. (NYSE:CNNE) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistic is 43. CNNE has seen a decrease in support from the world’s most elite money managers lately. There were 36 hedge funds in our database with CNNE positions at the end of the first quarter. Our calculations also showed that CNNE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to review the latest hedge fund action surrounding Cannae Holdings, Inc. (NYSE:CNNE).
Do Hedge Funds Think CNNE Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. By comparison, 43 hedge funds held shares or bullish call options in CNNE a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Cannae Holdings, Inc. (NYSE:CNNE) was held by Nitorum Capital, which reported holding $112 million worth of stock at the end of June. It was followed by Empyrean Capital Partners with a $64.3 million position. Other investors bullish on the company included D E Shaw, Eminence Capital, and Azora Capital. In terms of the portfolio weights assigned to each position Nitorum Capital allocated the biggest weight to Cannae Holdings, Inc. (NYSE:CNNE), around 5.1% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, earmarking 4.79 percent of its 13F equity portfolio to CNNE.
Because Cannae Holdings, Inc. (NYSE:CNNE) has witnessed declining sentiment from the smart money, it’s easy to see that there is a sect of fund managers who were dropping their full holdings by the end of the second quarter. It’s worth mentioning that Frank Fu’s CaaS Capital cut the largest stake of all the hedgies watched by Insider Monkey, worth close to $9.9 million in stock. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also dropped its stock, about $4.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the second quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cannae Holdings, Inc. (NYSE:CNNE) but similarly valued. These stocks are CNO Financial Group Inc (NYSE:CNO), Integer Holdings Corporation (NYSE:ITGR), GrafTech International Ltd. (NYSE:EAF), 2U Inc (NASDAQ:TWOU), Phreesia, Inc. (NYSE:PHR), Pebblebrook Hotel Trust (NYSE:PEB), and Livent Corporation (NYSE:LTHM). All of these stocks’ market caps are closest to CNNE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNO | 21 | 363432 | 3 |
| ITGR | 23 | 200458 | 7 |
| EAF | 36 | 377086 | -2 |
| TWOU | 25 | 757888 | 2 |
| PHR | 26 | 226853 | -1 |
| PEB | 17 | 57810 | 7 |
| LTHM | 27 | 251159 | 5 |
| Average | 25 | 319241 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $319 million. That figure was $522 million in CNNE’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand Pebblebrook Hotel Trust (NYSE:PEB) is the least popular one with only 17 bullish hedge fund positions. Cannae Holdings, Inc. (NYSE:CNNE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CNNE is 71.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately CNNE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CNNE were disappointed as the stock returned -9.3% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Cannae Holdings Inc. (NYSE:CNNE)
Follow Cannae Holdings Inc. (NYSE:CNNE)
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Disclosure: None. This article was originally published at Insider Monkey.
