Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Century Bancorp, Inc. (NASDAQ:CNBKA) from the perspective of those elite funds.
Century Bancorp, Inc. (NASDAQ:CNBKA) was in 5 hedge funds’ portfolios at the end of the third quarter of 2019. CNBKA has seen an increase in support from the world’s most elite money managers in recent months. There were 3 hedge funds in our database with CNBKA positions at the end of the previous quarter. Our calculations also showed that CNBKA 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 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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Keeping this in mind we’re going to check out the fresh hedge fund action surrounding Century Bancorp, Inc. (NASDAQ:CNBKA).
What does smart money think about Century Bancorp, Inc. (NASDAQ:CNBKA)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in CNBKA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Century Bancorp, Inc. (NASDAQ:CNBKA), with a stake worth $12.9 million reported as of the end of September. Trailing Renaissance Technologies was Minerva Advisors, which amassed a stake valued at $2.8 million. Winton Capital Management, Millennium Management, and Marshall Wace were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Century Bancorp, Inc. (NASDAQ:CNBKA), around 1.55% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to CNBKA.
Consequently, some big names were breaking ground themselves. Winton Capital Management, managed by David Harding, established the most outsized position in Century Bancorp, Inc. (NASDAQ:CNBKA). Winton Capital Management had $1.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also initiated a $0.1 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to Century Bancorp, Inc. (NASDAQ:CNBKA). These stocks are Digimarc Corporation (NASDAQ:DMRC), Digimarc Corporation (NASDAQ:DMRC), Arrow Financial Corporation (NASDAQ:AROW), and Spartan Motors Inc (NASDAQ:SPAR). This group of stocks’ market valuations are similar to CNBKA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DMRC | 6 | 38801 | 0 |
| DMRC | 6 | 38801 | 0 |
| AROW | 5 | 14797 | 2 |
| SPAR | 14 | 61216 | 3 |
| Average | 7.75 | 38404 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $18 million in CNBKA’s case. Spartan Motors Inc (NASDAQ:SPAR) is the most popular stock in this table. On the other hand Arrow Financial Corporation (NASDAQ:AROW) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Century Bancorp, Inc. (NASDAQ:CNBKA) is even less popular than AROW. Hedge funds dodged a bullet by taking a bearish stance towards CNBKA. 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 CNBKA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CNBKA investors were disappointed as the stock returned -0.3% 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.
