We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards CNB Financial Corporation (NASDAQ:CCNE).
Is CNB Financial Corporation (NASDAQ:CCNE) the right investment to pursue these days? Prominent investors were taking a bullish view. The number of long hedge fund positions went up by 2 in recent months. CNB Financial Corporation (NASDAQ:CCNE) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CCNE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 6 hedge funds in our database with CCNE positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are assumed to be unimportant, old financial tools of yesteryear. While there are more than 8000 funds trading today, Our researchers look at the leaders of this club, about 850 funds. These hedge fund managers administer most of the hedge fund industry’s total capital, and by paying attention to their finest picks, Insider Monkey has revealed a number of investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Roger Ibbotson of Zebra Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a gander at the fresh hedge fund action surrounding CNB Financial Corporation (NASDAQ:CCNE).
What does smart money think about CNB Financial Corporation (NASDAQ:CCNE)?
At third quarter’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in CCNE a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in CNB Financial Corporation (NASDAQ:CCNE), which was worth $3.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $3.2 million worth of shares. Millennium Management, Arrowstreet Capital, and Citadel Investment Group 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 Zebra Capital Management allocated the biggest weight to CNB Financial Corporation (NASDAQ:CCNE), around 0.65% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to CCNE.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most outsized position in CNB Financial Corporation (NASDAQ:CCNE). Arrowstreet Capital had $0.8 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also made a $0.4 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CNB Financial Corporation (NASDAQ:CCNE) but similarly valued. We will take a look at Aspen Group Inc. (NASDAQ:ASPU), AXT Inc (NASDAQ:AXTI), Northern Oil & Gas, Inc. (NYSE:NOG), Enterprise Bancorp, Inc (NASDAQ:EBTC), Retail Value Inc. (NYSE:RVI), Chiasma Inc (NASDAQ:CHMA), and Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI). This group of stocks’ market valuations resemble CCNE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASPU | 9 | 33426 | -1 |
| AXTI | 8 | 15855 | -4 |
| NOG | 12 | 29194 | -10 |
| EBTC | 2 | 955 | 1 |
| RVI | 15 | 75281 | -1 |
| CHMA | 15 | 63581 | 1 |
| CMPI | 5 | 23436 | 5 |
| Average | 9.4 | 34533 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $11 million in CCNE’s case. Retail Value Inc. (NYSE:RVI) is the most popular stock in this table. On the other hand Enterprise Bancorp, Inc (NASDAQ:EBTC) is the least popular one with only 2 bullish hedge fund positions. CNB Financial Corporation (NASDAQ:CCNE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CCNE is 60.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on CCNE as the stock returned 37.7% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
