Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the fourth quarter. Among them, Amazon and Netflix ranked among the top 30 picks and both lost more than 25%. Facebook, which was the second most popular stock, lost 20% amid uncertainty regarding the interest rates and tech valuations. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 15 large-cap stock picks generated a return of 19.7% during the first 2.5 months of 2019 and outperformed the broader market benchmark by 6.6 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Camping World Holdings, Inc. (NYSE:CWH) a buy, sell, or hold? Money managers are becoming less confident. The number of bullish hedge fund positions were cut by 6 lately. Our calculations also showed that CWH isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the latest hedge fund action regarding Camping World Holdings, Inc. (NYSE:CWH).
What does the smart money think about Camping World Holdings, Inc. (NYSE:CWH)?
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CWH over the last 14 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Abrams Capital Management was the largest shareholder of Camping World Holdings, Inc. (NYSE:CWH), with a stake worth $44.3 million reported as of the end of December. Trailing Abrams Capital Management was Royce & Associates, which amassed a stake valued at $14.3 million. North Run Capital, Marshall Wace LLP, and Newtyn Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Camping World Holdings, Inc. (NYSE:CWH) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of fund managers that elected to cut their positions entirely last quarter. Interestingly, Joshua Kaufman and Craig Nerenberg’s Brenner West Capital Partners said goodbye to the largest investment of the 700 funds tracked by Insider Monkey, worth close to $18 million in stock. Josh Donfeld and David Rogers’s fund, Castle Hook Partners, also said goodbye to its stock, about $15.2 million worth. These moves are interesting, as total hedge fund interest fell by 6 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Camping World Holdings, Inc. (NYSE:CWH). These stocks are Diplomat Pharmacy Inc (NYSE:DPLO), Investment Technology Group (NYSE:ITG), Organogenesis Holdings Inc. (NASDAQ:ORGO), and K12 Inc. (NYSE:LRN). This group of stocks’ market values match CWH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DPLO | 10 | 62300 | -3 |
| ITG | 14 | 85669 | 4 |
| ORGO | 8 | 27212 | -5 |
| LRN | 21 | 152616 | 2 |
| Average | 13.25 | 81949 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $71 million in CWH’s case. K12 Inc. (NYSE:LRN) is the most popular stock in this table. On the other hand Organogenesis Holdings Inc. (NASDAQ:ORGO) is the least popular one with only 8 bullish hedge fund positions. Camping World Holdings, Inc. (NYSE:CWH) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on CWH, though not to the same extent, as the stock returned 18.6% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
