We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. 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 CVB Financial Corp. (NASDAQ:CVBF).
CVB Financial Corp. (NASDAQ:CVBF) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Gates Industrial Corporation plc (NYSE:GTES), SkyWest, Inc. (NASDAQ:SKYW), and WNS (Holdings) Limited (NYSE:WNS) to gather more data points. Our calculations also showed that CVBF 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 the average investor there are several metrics investors can use to value their stock investments. A duo of the most useful metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top money managers can trounce the market by a healthy amount (see the details here).
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the latest hedge fund action regarding CVB Financial Corp. (NASDAQ:CVBF).
Hedge fund activity in CVB Financial Corp. (NASDAQ:CVBF)
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in CVBF a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in CVB Financial Corp. (NASDAQ:CVBF) was held by Renaissance Technologies, which reported holding $26 million worth of stock at the end of September. It was followed by D E Shaw with a $4.9 million position. Other investors bullish on the company included GLG Partners, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to CVB Financial Corp. (NASDAQ:CVBF), around 0.02% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to CVBF.
Due to the fact that CVB Financial Corp. (NASDAQ:CVBF) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that elected to cut their entire stakes last quarter. Interestingly, Benjamin A. Smith’s Laurion Capital Management sold off the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $0.8 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CVB Financial Corp. (NASDAQ:CVBF) but similarly valued. These stocks are Gates Industrial Corporation plc (NYSE:GTES), SkyWest, Inc. (NASDAQ:SKYW), WNS (Holdings) Limited (NYSE:WNS), and RLJ Lodging Trust (NYSE:RLJ). This group of stocks’ market values resemble CVBF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GTES | 14 | 50130 | 1 |
| SKYW | 15 | 177096 | 2 |
| WNS | 18 | 214456 | 2 |
| RLJ | 19 | 148775 | -2 |
| Average | 16.5 | 147614 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $44 million in CVBF’s case. RLJ Lodging Trust (NYSE:RLJ) is the most popular stock in this table. On the other hand Gates Industrial Corporation plc (NYSE:GTES) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks CVB Financial Corp. (NASDAQ:CVBF) is even less popular than GTES. Hedge funds dodged a bullet by taking a bearish stance towards CVBF. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CVBF wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CVBF investors were disappointed as the stock returned 3.2% 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
