The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Cabot Corporation (NYSE:CBT).
Is Cabot Corporation (NYSE:CBT) the right pick for your portfolio? Hedge funds were in a bullish mood. The number of long hedge fund positions improved by 3 lately. Cabot Corporation (NYSE:CBT) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that CBT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a gander at the new hedge fund action regarding Cabot Corporation (NYSE:CBT).
Do Hedge Funds Think CBT Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CBT over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the most valuable position in Cabot Corporation (NYSE:CBT), worth close to $23.8 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $21.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Israel Englander’s Millennium Management, Noam Gottesman’s GLG Partners and Frank Fu’s CaaS Capital. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Cabot Corporation (NYSE:CBT), around 2.57% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, designating 0.71 percent of its 13F equity portfolio to CBT.
Consequently, key hedge funds were leading the bulls’ herd. CaaS Capital, managed by Frank Fu, established the largest position in Cabot Corporation (NYSE:CBT). CaaS Capital had $8.3 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $1.6 million investment in the stock during the quarter. The other funds with brand new CBT positions are Michael Gelband’s ExodusPoint Capital, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Donald Sussman’s Paloma Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cabot Corporation (NYSE:CBT) but similarly valued. We will take a look at Prospect Capital Corporation (NASDAQ:PSEC), United Community Banks Inc (NASDAQ:UCBI), ALX Oncology Holdings Inc. (NASDAQ:ALXO), Corporate Office Properties Trust (NYSE:OFC), Youdao, Inc. (NYSE:DAO), Vonage Holdings Corp. (NASDAQ:VG), and International Bancshares Corp (NASDAQ:IBOC). This group of stocks’ market caps are closest to CBT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSEC | 7 | 11641 | -1 |
| UCBI | 11 | 33369 | 0 |
| ALXO | 11 | 718523 | -4 |
| OFC | 19 | 155964 | 2 |
| DAO | 9 | 325871 | 2 |
| VG | 36 | 549476 | -1 |
| IBOC | 13 | 141207 | 0 |
| Average | 15.1 | 276579 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $277 million. That figure was $112 million in CBT’s case. Vonage Holdings Corp. (NASDAQ:VG) is the most popular stock in this table. On the other hand Prospect Capital Corporation (NASDAQ:PSEC) is the least popular one with only 7 bullish hedge fund positions. Cabot Corporation (NYSE:CBT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CBT is 59.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately CBT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CBT were disappointed as the stock returned 3.1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
