It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Total Return Index ETFs returned approximately 27.5% in 2019 (through the end of November). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 37.4% during the same 11-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Collectors Universe, Inc. (NASDAQ:CLCT).
Is Collectors Universe, Inc. (NASDAQ:CLCT) the right pick for your portfolio? Investors who are in the know are turning bullish. The number of bullish hedge fund bets improved by 2 in recent months. Our calculations also showed that CLCT 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.
To most traders, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are over 8000 funds trading today, Our researchers look at the moguls of this club, about 750 funds. These hedge fund managers direct the majority of the hedge fund industry’s total asset base, and by keeping track of their matchless equity investments, Insider Monkey has formulated many investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Chuck Royce of Royce & Associates
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 based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to view the latest hedge fund action surrounding Collectors Universe, Inc. (NASDAQ:CLCT).
What have hedge funds been doing with Collectors Universe, Inc. (NASDAQ:CLCT)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in CLCT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the most valuable position in Collectors Universe, Inc. (NASDAQ:CLCT). Renaissance Technologies has a $21 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, holding a $4.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Overdeck and David Siegel’s Two Sigma Advisors and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Collectors Universe, Inc. (NASDAQ:CLCT), around 0.04% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to CLCT.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Winton Capital Management, managed by David Harding, initiated the largest position in Collectors Universe, Inc. (NASDAQ:CLCT). Winton Capital Management had $2.4 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $0.7 million investment in the stock during the quarter. The only other fund with a new position in the stock is David E. Shaw’s D E Shaw.
Let’s also examine hedge fund activity in other stocks similar to Collectors Universe, Inc. (NASDAQ:CLCT). These stocks are Viemed Healthcare, Inc. (NASDAQ:VMD), Pioneer Floating Rate Trust (NYSE:PHD), Mayville Engineering Company, Inc. (NYSE:MEC), and Venator Materials PLC (NYSE:VNTR). This group of stocks’ market values are closest to CLCT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VMD | 4 | 11765 | 4 |
| PHD | 1 | 25269 | -2 |
| MEC | 11 | 19398 | 2 |
| VNTR | 17 | 35827 | -1 |
| Average | 8.25 | 23065 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $34 million in CLCT’s case. Venator Materials PLC (NYSE:VNTR) is the most popular stock in this table. On the other hand Pioneer Floating Rate Trust (NYSE:PHD) is the least popular one with only 1 bullish hedge fund positions. Collectors Universe, Inc. (NASDAQ:CLCT) 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 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 CLCT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLCT were disappointed as the stock returned -7.2% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
