With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Cable One Inc (NYSE:CABO).
Cable One Inc (NYSE:CABO) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 27. CABO has experienced a decrease in support from the world’s most elite money managers in recent months. There were 23 hedge funds in our database with CABO holdings at the end of March. Our calculations also showed that CABO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Keeping this in mind we’re going to go over the new hedge fund action encompassing Cable One Inc (NYSE:CABO).
Do Hedge Funds Think CABO Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in CABO a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Cable One Inc (NYSE:CABO), with a stake worth $315.6 million reported as of the end of June. Trailing Renaissance Technologies was Gardner Russo & Gardner, which amassed a stake valued at $171.9 million. Citadel Investment Group, Wallace Capital Management, and Point72 Asset Management 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 Wallace Capital Management allocated the biggest weight to Cable One Inc (NYSE:CABO), around 8.64% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, setting aside 4.68 percent of its 13F equity portfolio to CABO.
Because Cable One Inc (NYSE:CABO) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers who were dropping their entire stakes last quarter. Intriguingly, Noam Gottesman’s GLG Partners dropped the largest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $4.2 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Cable One Inc (NYSE:CABO). These stocks are Westlake Chemical Corporation (NYSE:WLK), Booz Allen Hamilton Holding Corporation (NYSE:BAH), Bruker Corporation (NASDAQ:BRKR), RPM International Inc. (NYSE:RPM), Axovant Sciences Ltd (NYSE:AXON), Sunrun Inc (NASDAQ:RUN), and Sprint Corporation (NYSE:S). This group of stocks’ market valuations match CABO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLK | 35 | 269784 | 9 |
| BAH | 29 | 214976 | 0 |
| BRKR | 31 | 459507 | 9 |
| RPM | 22 | 91588 | 2 |
| AXON | 24 | 513588 | -7 |
| RUN | 45 | 2517525 | 4 |
| S | 67 | 2062506 | 67 |
| Average | 36.1 | 875639 | 12 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $876 million. That figure was $703 million in CABO’s case. Sprint Corporation (NYSE:S) is the most popular stock in this table. On the other hand RPM International Inc. (NYSE:RPM) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Cable One Inc (NYSE:CABO) is even less popular than RPM. Our overall hedge fund sentiment score for CABO is 24.2. 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. Hedge funds dodged a bullet by taking a bearish stance towards CABO. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd but managed to beat the market again by 1.6 percentage points. Unfortunately CABO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); CABO investors were disappointed as the stock returned -6.3% since the end of the second quarter (through 10/22) 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 most of these stocks already outperformed the market since 2019.
Follow Cable One Inc. (NYSE:CABO)
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Disclosure: None. This article was originally published at Insider Monkey.
