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 Clarivate Analytics Plc (NYSE:CCC).
Clarivate Analytics Plc (NYSE:CCC) was in 38 hedge funds’ portfolios at the end of September. CCC investors should pay attention to an increase in hedge fund sentiment of late. There were 21 hedge funds in our database with CCC positions at the end of the previous quarter. Our calculations also showed that CCC 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.
Daniel Sundheim of D1 Capital Partners
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the fresh hedge fund action regarding Clarivate Analytics Plc (NYSE:CCC).
How are hedge funds trading Clarivate Analytics Plc (NYSE:CCC)?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 81% from the second quarter of 2019. On the other hand, there were a total of 25 hedge funds with a bullish position in CCC 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.
Among these funds, Select Equity Group held the most valuable stake in Clarivate Analytics Plc (NYSE:CCC), which was worth $152.2 million at the end of the third quarter. On the second spot was D1 Capital Partners which amassed $100 million worth of shares. Brahman Capital, JS Capital, and Tiger Eye Capital 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 Antipodean Advisors allocated the biggest weight to Clarivate Analytics Plc (NYSE:CCC), around 16.53% of its portfolio. Ratan Capital Group is also relatively very bullish on the stock, dishing out 14.49 percent of its 13F equity portfolio to CCC.
Consequently, key money managers were breaking ground themselves. Banbury Partners, managed by Baker Burleson and Stormy Scott, created the most outsized position in Clarivate Analytics Plc (NYSE:CCC). Banbury Partners had $26.6 million invested in the company at the end of the quarter. Dennis Puri and Oliver Keller’s Hunt Lane Capital also initiated a $20.1 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Israel Englander’s Millennium Management, and Jeffrey Talpins’s Element Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Clarivate Analytics Plc (NYSE:CCC) but similarly valued. These stocks are Companhia Brasileira de Distrib. (NYSE:CBD), Integra Lifesciences Holdings Corp (NASDAQ:IART), GrubHub Inc (NYSE:GRUB), and Eaton Vance Corp (NYSE:EV). All of these stocks’ market caps are similar to CCC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBD | 11 | 44794 | 0 |
| IART | 21 | 216426 | 0 |
| GRUB | 23 | 595061 | -9 |
| EV | 15 | 101488 | 0 |
| Average | 17.5 | 239442 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $686 million in CCC’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Companhia Brasileira de Distrib. (NYSE:CBD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Clarivate Analytics Plc (NYSE:CCC) is more popular among hedge funds. 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. Hedge funds were also right about betting on CCC, though not to the same extent, as the stock returned 6.6% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
