It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Chase Corporation (NYSEMKT:CCF).
Chase Corporation (NYSEMKT:CCF) has seen an increase in support from the world’s most successful money managers lately. Among the funds in our database, CCF was in eight hedge funds’ portfolios at the end of September. At the end of this article we will also compare CCF to other stocks including NeoGenomics, Inc. (NASDAQ:NEO), Nantkwest Inc (NASDAQ:NK), and AngioDynamics, Inc. (NASDAQ:ANGO) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Keeping this in mind, we’re going to check out the new action regarding Chase Corporation (NYSEMKT:CCF).
Hedge fund activity in Chase Corporation (NYSEMKT:CCF)
At the end of the third quarter, a total of eight of the hedge funds tracked by Insider Monkey held long positions in this stock, up by three funds from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in CCF over the last five quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Chase Corporation (NYSEMKT:CCF), worth close to $29.1 million, corresponding to 0.2% of its total 13F portfolio. On Royce & Associates’s heels is Renaissance Technologies, one of the largest hedge funds in the world, with a $18.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’ AQR Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. AQR Capital Management, led by Cliff Asness, assembled the largest position in Chase Corporation (NYSEMKT:CCF). AQR Capital Management had $0.5 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.2 million position during the quarter. The only other fund with a brand new CCF position is Robert B. Gillam’s McKinley Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Chase Corporation (NYSEMKT:CCF) but similarly valued. These stocks are NeoGenomics, Inc. (NASDAQ:NEO), Nantkwest Inc (NASDAQ:NK), AngioDynamics, Inc. (NASDAQ:ANGO), and Cerus Corporation (NASDAQ:CERS). All of these stocks’ market caps match CCF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEO | 12 | 29095 | -1 |
| NK | 6 | 36104 | 2 |
| ANGO | 17 | 138860 | 5 |
| CERS | 11 | 108267 | 0 |
As you can see these stocks had an average of 12 funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $51 million in CCF’s case. AngioDynamics, Inc. (NASDAQ:ANGO) is the most popular stock in this table. On the other hand Nantkwest Inc (NASDAQ:NK) is the least popular one with only six bullish hedge fund positions. Chase Corporation (NYSEMKT:CCF) 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. In this regard ANGO might be a better candidate to consider taking a long position in.
Disclosure: none
