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 Colfax Corporation (NYSE:CFX).
Is Colfax Corporation (NYSE:CFX) a buy, sell, or hold? Investors who are in the know were reducing their bets on the stock. The number of long hedge fund bets retreated by 18 in recent months. Colfax Corporation (NYSE:CFX) was in 31 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 49. Our calculations also showed that CFX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 49 hedge funds in our database with CFX holdings at the end of March.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was 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). So you can still find a lot of gems by following hedge funds’ moves today.
Jay Petschek of Corsair Capital Management
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 recent hedge fund action encompassing Colfax Corporation (NYSE:CFX).
Do Hedge Funds Think CFX Is A Good Stock To Buy Now?
At Q2’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -37% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in CFX over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Diamond Hill Capital, managed by Ric Dillon, holds the most valuable position in Colfax Corporation (NYSE:CFX). Diamond Hill Capital has a $206.4 million position in the stock, comprising 0.8% of its 13F portfolio. On Diamond Hill Capital’s heels is Ricky Sandler of Eminence Capital, with a $187.6 million position; 2.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish contain Amy Minella’s Cardinal Capital, John Smith Clark’s Southpoint Capital Advisors and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to Colfax Corporation (NYSE:CFX), around 4.71% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, setting aside 3.83 percent of its 13F equity portfolio to CFX.
Seeing as Colfax Corporation (NYSE:CFX) has faced falling interest from the smart money, logic holds that there were a few fund managers that slashed their positions entirely in the second quarter. At the top of the heap, D. E. Shaw’s D E Shaw dropped the biggest position of all the hedgies watched by Insider Monkey, valued at about $37 million in stock, and Franklin Parlamis’s Aequim Alternative Investments was right behind this move, as the fund said goodbye to about $31.5 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 18 funds in the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Colfax Corporation (NYSE:CFX) but similarly valued. We will take a look at J2 Global Inc (NASDAQ:JCOM), Sarepta Therapeutics Inc (NASDAQ:SRPT), Louisiana-Pacific Corporation (NYSE:LPX), Vir Biotechnology, Inc. (NASDAQ:VIR), Terminix Global Holdings, Inc. (NYSE:TMX), The Timken Company (NYSE:TKR), and Perrigo Co Plc (NYSE:PRGO). This group of stocks’ market valuations are similar to CFX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JCOM | 22 | 414616 | 0 |
| SRPT | 34 | 539734 | 1 |
| LPX | 39 | 852143 | 9 |
| VIR | 11 | 34719 | 2 |
| TMX | 22 | 417570 | -5 |
| TKR | 22 | 155285 | -1 |
| PRGO | 28 | 457403 | -5 |
| Average | 25.4 | 410210 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $410 million. That figure was $1074 million in CFX’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 11 bullish hedge fund positions. Colfax Corporation (NYSE:CFX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CFX is 41.7. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on CFX as the stock returned 10.5% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
