World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Casa Systems, Inc. (NASDAQ:CASA) investors should pay attention to an increase in enthusiasm from smart money lately. CASA was in 12 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 10 hedge funds in our database with CASA positions at the end of the previous quarter. Our calculations also showed that casa isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a peek at the recent hedge fund action surrounding Casa Systems, Inc. (NASDAQ:CASA).
What have hedge funds been doing with Casa Systems, Inc. (NASDAQ:CASA)?
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CASA over the last 14 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Steve Cohen’s Point72 Asset Management has the largest position in Casa Systems, Inc. (NASDAQ:CASA), worth close to $12.7 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $5.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish encompass Brian Gootzeit and Andrew Frank’s StackLine Partners, Joel Greenblatt’s Gotham Asset Management and Jim Simons’s Renaissance Technologies.
As one would reasonably expect, key hedge funds have been driving this bullishness. StackLine Partners, managed by Brian Gootzeit and Andrew Frank, created the most valuable position in Casa Systems, Inc. (NASDAQ:CASA). StackLine Partners had $3.5 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Casa Systems, Inc. (NASDAQ:CASA) but similarly valued. We will take a look at Standard Motor Products, Inc. (NYSE:SMP), PPDAI Group Inc. (NYSE:PPDF), Tortoise Energy Infrastructure Corporation (NYSE:TYG), and Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW). All of these stocks’ market caps are similar to CASA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMP | 11 | 128746 | 1 |
| PPDF | 6 | 4982 | 1 |
| TYG | 3 | 2890 | 0 |
| AAWW | 19 | 121011 | 4 |
| Average | 9.75 | 64407 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $29 million in CASA’s case. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 3 bullish hedge fund positions. Casa Systems, Inc. (NASDAQ:CASA) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CASA wasn’t nearly as popular as these 15 stock and hedge funds that were betting on CASA were disappointed as the stock returned -25.4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
