The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Clearwater Paper Corp (NYSE:CLW) based on those filings.
Is Clearwater Paper Corp (NYSE:CLW) a superb investment now? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions dropped by 1 lately. Our calculations also showed that CLW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CLW was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with CLW positions at the end of the previous quarter.
Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
Fred DiSanto of Ancora Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the recent hedge fund action encompassing Clearwater Paper Corp (NYSE:CLW).
Hedge fund activity in Clearwater Paper Corp (NYSE:CLW)
Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in CLW a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in Clearwater Paper Corp (NYSE:CLW) was held by Sabrepoint Capital, which reported holding $12.9 million worth of stock at the end of September. It was followed by Schonfeld Strategic Advisors with a $6.6 million position. Other investors bullish on the company included Sabrepoint Capital, Citadel Investment Group, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Sabrepoint Capital allocated the biggest weight to Clearwater Paper Corp (NYSE:CLW), around 5.23% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, earmarking 0.42 percent of its 13F equity portfolio to CLW.
Judging by the fact that Clearwater Paper Corp (NYSE:CLW) has witnessed declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of money managers that elected to cut their entire stakes in the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest position of the “upper crust” of funds followed by Insider Monkey, valued at about $4.1 million in stock, and Brian C. Freckmann’s Lyon Street Capital was right behind this move, as the fund dropped about $0.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the first quarter.
Let’s check out hedge fund activity in other stocks similar to Clearwater Paper Corp (NYSE:CLW). These stocks are American Public Education, Inc. (NASDAQ:APEI), The First Bancshares, Inc. (MS) (NASDAQ:FBMS), Meridian Bioscience, Inc. (NASDAQ:VIVO), and Universal Logistics Holdings, Inc. (NASDAQ:ULH). This group of stocks’ market values match CLW’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APEI | 13 | 61095 | -1 |
| FBMS | 5 | 16211 | -1 |
| VIVO | 20 | 57229 | 3 |
| ULH | 8 | 15656 | -3 |
| Average | 11.5 | 37548 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $23 million in CLW’s case. Meridian Bioscience, Inc. (NASDAQ:VIVO) is the most popular stock in this table. On the other hand The First Bancshares, Inc. (MS) (NASDAQ:FBMS) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Clearwater Paper Corp (NYSE:CLW) is even less popular than FBMS. Hedge funds clearly dropped the ball on CLW as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on CLW as the stock returned 32.8% so far in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
