Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
California Resources Corporation. (NYSE:CRC) was in 31 hedge funds’ portfolios at the end of September. CRC investors should be aware of a decrease in activity from the world’s largest hedge funds recently. There were 37 hedge funds in our database with CRC holdings at the end of the previous quarter. At the end of this article we will also compare CRC to other stocks, including NxStage Medical, Inc. (NASDAQ:NXTM), Banner Corporation (NASDAQ:BANR), and Cooper-Standard Holdings Inc (NYSE:CPS) to get a better sense of its popularity.
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To the average investor, there are plenty of metrics stock traders can use to size up publicly traded companies. A pair of the most useful metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outclass the S&P 500 by a superb margin (see the details here).
With all of this in mind, let’s view the fresh action surrounding California Resources Corporation. (NYSE:CRC).
How are hedge funds trading California Resources Corporation. (NYSE:CRC)?
Heading into Q4, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 16% from the previous quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Soroban Capital Partners, managed by Eric W. Mandelblatt, holds the largest position in California Resources Corporation. (NYSE:CRC). In its latest quarterly report, the fund reportedly held a $89.2 million stake in the company, comprising 0.6% of its 13F portfolio. Coming in second is Steven Richman of East Side Capital (RR Partners), with a $34.2 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Stephen C. Freidheim’s Cyrus Capital Partners, George Soros’s Soros Fund Management and Gordy Holterman and Derek Dunn’s Overland Advisors.
Due to the fact that California Resources Corporation (NYSE:CRC) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of funds who sold off their full holdings last quarter. Intriguingly, Mason Hawkins’s Southeastern Asset Management said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $81.8 million in stock, and Zac Hirzel’s Hirzel Capital Management was right behind this move, as the fund dumped about $20.9 million worth of CRC shares. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as California Resources Corporation. (NYSE:CRC) but similarly valued. We will take a look at NxStage Medical, Inc. (NASDAQ:NXTM), Banner Corporation (NASDAQ:BANR), Cooper-Standard Holdings Inc (NYSE:CPS), and Wright Medical Group NV (NASDAQ:TRNX). This group of stocks’ market valuations are closest to CRC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NXTM | 20 | 209625 | -10 |
| BANR | 17 | 100374 | 5 |
| CPS | 14 | 380291 | -3 |
| TRNX | 14 | 60840 | -6 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $293 million in CRC’s case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table. On the other hand Cooper-Standard Holdings Inc (NYSE:CPS) and Wright Medical Group NV (NASDAQ:TRNX) are the least popular ones, with only 14 bullish hedge fund positions each. Compared to these stocks California Resources Corporation (NYSE:CRC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
