With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Cabot Corporation (NYSE:CBT).
Cabot Corporation (NYSE:CBT) was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2018. CBT shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 24 hedge funds in our database with CBT holdings at the end of the previous quarter. Our calculations also showed that cbt isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a peek at the recent hedge fund action surrounding Cabot Corporation (NYSE:CBT).
How are hedge funds trading Cabot Corporation (NYSE:CBT)?
Heading into the first quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in CBT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in Cabot Corporation (NYSE:CBT), which was worth $31.2 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $18.8 million worth of shares. Moreover, Millennium Management, Royce & Associates, and Citadel Investment Group were also bullish on Cabot Corporation (NYSE:CBT), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Rubric Capital Management, managed by David Rosen, established the largest position in Cabot Corporation (NYSE:CBT). Rubric Capital Management had $4.6 million invested in the company at the end of the quarter. Alexander Roepers’s Atlantic Investment Management also made a $2.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Bernard Horn’s Polaris Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Joel Greenblatt’s Gotham Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Cabot Corporation (NYSE:CBT). We will take a look at Weight Watchers International, Inc. (NASDAQ:WTW), Coherent, Inc. (NASDAQ:COHR), AVX Corporation (NYSE:AVX), and Canada Goose Holdings Inc. (NYSE:GOOS). All of these stocks’ market caps are similar to CBT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTW | 23 | 140552 | -8 |
| COHR | 17 | 104247 | 4 |
| AVX | 16 | 120045 | 0 |
| GOOS | 29 | 174702 | 11 |
| Average | 21.25 | 134887 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $124 million in CBT’s case. Canada Goose Holdings Inc. (NYSE:GOOS) is the most popular stock in this table. On the other hand AVX Corporation (NYSE:AVX) is the least popular one with only 16 bullish hedge fund positions. Cabot Corporation (NYSE:CBT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CBT wasn’t nearly as popular as these 15 stock and hedge funds that were betting on CBT were disappointed as the stock returned 11.1% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
