Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of ChromaDex Corporation (NASDAQ:CDXC).
ChromaDex Corporation (NASDAQ:CDXC) was in 4 hedge funds’ portfolios at the end of September. CDXC investors should pay attention to an increase in hedge fund interest lately. There were 1 hedge funds in our database with CDXC positions at the end of the previous quarter. Our calculations also showed that CDXC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a lot of methods shareholders put to use to grade stocks. A pair of the best methods are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can outclass the market by a solid margin (see the details here).
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s review the recent hedge fund action regarding ChromaDex Corporation (NASDAQ:CDXC).
How are hedge funds trading ChromaDex Corporation (NASDAQ:CDXC)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 300% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CDXC over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Millennium Management, managed by Israel Englander, holds the most valuable position in ChromaDex Corporation (NASDAQ:CDXC). Millennium Management has a $0.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain David Harding’s Winton Capital Management, Cliff Asness’s AQR Capital Management and . In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to ChromaDex Corporation (NASDAQ:CDXC), around 0.0015% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.001 percent of its 13F equity portfolio to CDXC.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Renaissance Technologies established the most outsized position in ChromaDex Corporation (NASDAQ:CDXC). Renaissance Technologies had $0.2 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.1 million position during the quarter. The only other fund with a brand new CDXC position is Cliff Asness’s AQR Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to ChromaDex Corporation (NASDAQ:CDXC). We will take a look at NuCana plc (NASDAQ:NCNA), Safeguard Scientifics, Inc. (NYSE:SFE), Gravity Co., LTD. (NASDAQ:GRVY), and Bioceres Crop Solutions Corp. (NYSE:BIOX). This group of stocks’ market values match CDXC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NCNA | 6 | 11658 | 5 |
| SFE | 10 | 26279 | 4 |
| GRVY | 3 | 2578 | -3 |
| BIOX | 3 | 261 | -1 |
| Average | 5.5 | 10194 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in CDXC’s case. Safeguard Scientifics, Inc. (NYSE:SFE) is the most popular stock in this table. On the other hand Gravity Co., LTD. (NASDAQ:GRVY) is the least popular one with only 3 bullish hedge fund positions. ChromaDex Corporation (NASDAQ:CDXC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CDXC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CDXC investors were disappointed as the stock returned -7.6% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
