We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Coda Octopus Group, Inc. (NASDAQ:CODA) based on that data.
Coda Octopus Group, Inc. (NASDAQ:CODA) investors should be aware of a decrease in support from the world’s most elite money managers recently. CODA was in 3 hedge funds’ portfolios at the end of March. There were 4 hedge funds in our database with CODA holdings at the end of the previous quarter. Our calculations also showed that CODA 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).
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 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 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
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a look at the key hedge fund action regarding Coda Octopus Group, Inc. (NASDAQ:CODA).
How are hedge funds trading Coda Octopus Group, Inc. (NASDAQ:CODA)?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CODA over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Marshall Wace LLP held the most valuable stake in Coda Octopus Group, Inc. (NASDAQ:CODA), which was worth $0.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $0.2 million worth of shares. Winton Capital Management was 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 Marshall Wace LLP allocated the biggest weight to Coda Octopus Group, Inc. (NASDAQ:CODA), around 0.0047% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.0022 percent of its 13F equity portfolio to CODA.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified CODA as a viable investment and initiated a position in the stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Coda Octopus Group, Inc. (NASDAQ:CODA) but similarly valued. We will take a look at Extraction Oil & Gas, Inc. (NASDAQ:XOG), Wayside Technology Group, Inc. (NASDAQ:WSTG), Computer Task Group, Inc. (NASDAQ:CTG), and Jerash Holdings (US), Inc. (NASDAQ:JRSH). All of these stocks’ market caps are similar to CODA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XOG | 6 | 3834 | -6 |
| WSTG | 2 | 4150 | 0 |
| CTG | 7 | 9934 | 1 |
| JRSH | 3 | 837 | 0 |
| Average | 4.5 | 4689 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in CODA’s case. Computer Task Group, Inc. (NASDAQ:CTG) is the most popular stock in this table. On the other hand Wayside Technology Group, Inc. (NASDAQ:WSTG) is the least popular one with only 2 bullish hedge fund positions. Coda Octopus Group, Inc. (NASDAQ:CODA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately CODA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CODA investors were disappointed as the stock returned -16.4% during the second quarter 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
