At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Care.com Inc (NYSE:CRCM) shareholders have witnessed a decrease in enthusiasm from smart money in recent months. CRCM was in 17 hedge funds’ portfolios at the end of December. There were 19 hedge funds in our database with CRCM holdings at the end of the previous quarter. Our calculations also showed that CRCM isn’t among the 30 most popular stocks among hedge funds.
Today there are several gauges stock market investors have at their disposal to appraise stocks. Some of the most innovative gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top hedge fund managers can beat their index-focused peers by a very impressive margin (see the details here).
We’re going to check out the new hedge fund action regarding Care.com Inc (NYSE:CRCM).
What does the smart money think about Care.com Inc (NYSE:CRCM)?
At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in CRCM a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Care.com Inc (NYSE:CRCM) was held by Tenzing Global Investors, which reported holding $47.3 million worth of stock at the end of December. It was followed by Portolan Capital Management with a $36.8 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and AQR Capital Management.
Seeing as Care.com Inc (NYSE:CRCM) has faced falling interest from hedge fund managers, logic holds that there lies a certain “tier” of money managers that elected to cut their positions entirely in the third quarter. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $0.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also cut its stock, about $0.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Care.com Inc (NYSE:CRCM) but similarly valued. We will take a look at Tuniu Corporation (NASDAQ:TOUR), GMS Inc. (NYSE:GMS), Opera Limited (NASDAQ:OPRA), and Bojangles’ Inc (NASDAQ:BOJA). All of these stocks’ market caps match CRCM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOUR | 5 | 33046 | 2 |
| GMS | 20 | 97296 | -4 |
| OPRA | 5 | 5242 | -3 |
| BOJA | 12 | 37500 | -2 |
| Average | 10.5 | 43271 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $174 million in CRCM’s case. GMS Inc. (NYSE:GMS) is the most popular stock in this table. On the other hand Tuniu Corporation (NASDAQ:TOUR) is the least popular one with only 5 bullish hedge fund positions. Care.com Inc (NYSE:CRCM) 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 CRCM wasn’t nearly as popular as these 15 stock and hedge funds that were betting on CRCM were disappointed as the stock returned -18.6% 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.
