Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Cumulus Media Inc (NASDAQ:CMLS).
Is Cumulus Media Inc (NASDAQ:CMLS) an outstanding investment now? Money managers are altogether taking a bearish view. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings went down by 3 lately. CMLS was in 12 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with CMLS holdings at the end of the previous quarter. At the end of this article we will also compare CMLS to other stocks including Universal Stainless & Alloy Products (NASDAQ:USAP), Life Technologies Corp. (NASDAQ:LIFE), and UniPixel Inc (NASDAQ:UNXL) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading Cumulus Media Inc (NASDAQ:CMLS)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 20% from the second quarter of 2016. On the other hand, there were a total of 16 hedge funds with a bullish position in CMLS at the beginning of this year. So, let’s review 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, Jonathan Savitz’s Greywolf Capital Management has the largest position in Cumulus Media Inc (NASDAQ:CMLS), worth close to $6.6 million, amounting to 1.4% of its total 13F portfolio. On Greywolf Capital Management’s heels is Q Investments (Specter Holdings), led by Geoffrey Raynor, holding a $2.6 million position. Remaining professional money managers with similar optimism contain James Dondero’s Highland Capital Management, and Curtis Schenker and Craig Effron’s Scoggin. We should note that Q Investments (Specter Holdings) is 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.
Because Cumulus Media Inc (NASDAQ:CMLS) has encountered bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds who sold off their full holdings last quarter. It’s worth mentioning that Gordy Holterman and Derek Dunn’s Overland Advisors dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $1.5 million in stock. Joshua Friedman and Mitchell Julis’ fund, Canyon Capital Advisors, also sold off its stock, about $1 million worth.
Let’s check out hedge fund activity in other stocks similar to Cumulus Media Inc (NASDAQ:CMLS). These stocks are Universal Stainless & Alloy Products (NASDAQ:USAP), Life Technologies Corp. (NASDAQ:LIFE), UniPixel Inc (NASDAQ:UNXL), and Sito Mobile Ltd (NASDAQ:SITO). All of these stocks’ market caps are similar to CMLS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USAP | 6 | 11348 | -1 |
| LIFE | 6 | 6408 | 1 |
| UNXL | 4 | 722 | 0 |
| SITO | 5 | 2871 | 5 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $13 million in CMLS’s case. Universal Stainless & Alloy Products (NASDAQ:USAP) is the most popular stock in this table. On the other hand UniPixel Inc (NASDAQ:UNXL) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Cumulus Media Inc (NASDAQ:CMLS) 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.
Disclosure: None
