Hedge Funds Are Selling Cinemark Holdings, Inc. (CNK)

Is Cinemark Holdings, Inc. (NYSE:CNK) a first-rate investment now? Investors who are in the know are turning less bullish. The number of long hedge fund positions decreased by 2 recently.

If you’d ask most market participants, hedge funds are perceived as slow, old investment tools of yesteryear. While there are over 8000 funds trading today, we at Insider Monkey hone in on the bigwigs of this club, around 450 funds. It is estimated that this group controls the majority of the hedge fund industry’s total asset base, and by monitoring their best investments, we have uncovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as key, optimistic insider trading sentiment is another way to parse down the stock market universe. There are a variety of reasons for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the valuable potential of this tactic if “monkeys” understand where to look (learn more here).

Now, we’re going to take a glance at the latest action surrounding Cinemark Holdings, Inc. (NYSE:CNK).

What have hedge funds been doing with Cinemark Holdings, Inc. (NYSE:CNK)?

Heading into Q2, a total of 22 of the hedge funds we track were bullish in this stock, a change of -8% from the previous quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Osterweis Capital Management, managed by John Osterweis, holds the biggest position in Cinemark Holdings, Inc. (NYSE:CNK). Osterweis Capital Management has a $92.7 million position in the stock, comprising 3.5% of its 13F portfolio. On Osterweis Capital Management’s heels is Jim Simons of Renaissance Technologies, with a $87.8 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Mark Broach’s Manatuck Hill Partners, William Harnisch’s Peconic Partners LLC and Amy Minella’s Cardinal Capital.

Judging by the fact that Cinemark Holdings, Inc. (NYSE:CNK) has witnessed bearish sentiment from the smart money, logic holds that there were a few funds who were dropping their entire stakes last quarter. It’s worth mentioning that Charles Clough’s Clough Capital Partners cut the largest investment of the “upper crust” of funds we monitor, comprising close to $12.5 million in stock., and John Zaro of Bourgeon Capital was right behind this move, as the fund dumped about $2.2 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds last quarter.

Insider trading activity in Cinemark Holdings, Inc. (NYSE:CNK)

Bullish insider trading is at its handiest when the company in question has seen transactions within the past half-year. Over the latest 180-day time period, Cinemark Holdings, Inc. (NYSE:CNK) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Cinemark Holdings, Inc. (NYSE:CNK). These stocks are Carmike Cinemas, Inc. (NASDAQ:CKEC), RealD (NYSE:RLD), Dreamworks Animation Skg Inc (NASDAQ:DWA), Regal Entertainment Group (NYSE:RGC), and Lions Gate Entertainment Corp. (USA) (NYSE:LGF). This group of stocks are in the movie production, theaters industry and their market caps match CNK’s market cap.

With the returns demonstrated by our studies, retail investors must always keep an eye on hedge fund and insider trading activity, and Cinemark Holdings, Inc. (NYSE:CNK) is an important part of this process.

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