Hedge Funds Never Been Less Bullish On Seacor Holdings, Inc. (CKH)

In this article you are going to find out whether hedge funds think Seacor Holdings, Inc. (NYSE:CKH) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Seacor Holdings, Inc. (NYSE:CKH) a worthy investment now? Prominent investors are taking a pessimistic view. The number of bullish hedge fund positions fell by 7 in recent months. Our calculations also showed that CKH 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). CKH was in 9 hedge funds’ portfolios at the end of the first quarter of 2020. There were 16 hedge funds in our database with CKH holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

David Harding of Winton Capital Management

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. 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. Keeping this in mind we’re going to review the latest hedge fund action encompassing Seacor Holdings, Inc. (NYSE:CKH).

Hedge fund activity in Seacor Holdings, Inc. (NYSE:CKH)

Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -44% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in CKH a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Royce & Associates, managed by Chuck Royce, holds the number one position in Seacor Holdings, Inc. (NYSE:CKH). Royce & Associates has a $37.5 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $35 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism encompass D. E. Shaw’s D E Shaw, David Harding’s Winton Capital Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Seacor Holdings, Inc. (NYSE:CKH), around 0.51% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to CKH.

Seeing as Seacor Holdings, Inc. (NYSE:CKH) has faced bearish sentiment from the smart money, we can see that there were a few hedgies that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the largest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $4.1 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $2 million worth. These moves are interesting, as total hedge fund interest fell by 7 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Seacor Holdings, Inc. (NYSE:CKH) but similarly valued. These stocks are ScanSource, Inc. (NASDAQ:SCSC), Warrior Met Coal Inc. (NYSE:HCC), Vivint Solar Inc (NYSE:VSLR), and P.H. Glatfelter Company (NYSE:GLT). All of these stocks’ market caps match CKH’s market cap.

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As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $77 million in CKH’s case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand P.H. Glatfelter Company (NYSE:GLT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Seacor Holdings, Inc. (NYSE:CKH) is even less popular than GLT. Hedge funds dodged a bullet by taking a bearish stance towards CKH. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately CKH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CKH investors were disappointed as the stock returned 1.5% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

Disclosure: None. This article was originally published at Insider Monkey.