A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on America’s Car-Mart, Inc. (NASDAQ:CRMT).
Is America’s Car-Mart, Inc. (NASDAQ:CRMT) ready to rally soon? Investors who are in the know are in a pessimistic mood. The number of long hedge fund bets shrunk by 2 in recent months. Our calculations also showed that CRMT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the key hedge fund action regarding America’s Car-Mart, Inc. (NASDAQ:CRMT).
Hedge fund activity in America’s Car-Mart, Inc. (NASDAQ:CRMT)
Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CRMT over the last 17 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of America’s Car-Mart, Inc. (NASDAQ:CRMT), with a stake worth $19.8 million reported as of the end of September. Trailing Royce & Associates was Marshall Wace, which amassed a stake valued at $18.6 million. Portolan Capital Management, Arrowstreet Capital, and Azora Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Voce Capital allocated the biggest weight to America’s Car-Mart, Inc. (NASDAQ:CRMT), around 2.22% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, designating 1.52 percent of its 13F equity portfolio to CRMT.
Since America’s Car-Mart, Inc. (NASDAQ:CRMT) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers who were dropping their positions entirely heading into Q4. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management cut the largest stake of all the hedgies followed by Insider Monkey, totaling about $4 million in stock, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors was right behind this move, as the fund dumped about $2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as America’s Car-Mart, Inc. (NASDAQ:CRMT) but similarly valued. We will take a look at Everi Holdings Inc (NYSE:EVRI), Ellington Financial Inc. (NYSE:EFC), Simulations Plus, Inc. (NASDAQ:SLP), and Evolent Health Inc (NYSE:EVH). This group of stocks’ market caps match CRMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVRI | 23 | 164371 | -1 |
| EFC | 7 | 46892 | -2 |
| SLP | 14 | 40148 | 5 |
| EVH | 16 | 115507 | 0 |
| Average | 15 | 91730 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $88 million in CRMT’s case. Everi Holdings Inc (NYSE:EVRI) is the most popular stock in this table. On the other hand Ellington Financial Inc. (NYSE:EFC) is the least popular one with only 7 bullish hedge fund positions. America’s Car-Mart, Inc. (NASDAQ:CRMT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CRMT as the stock returned 19.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
