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 Caretrust REIT Inc (NASDAQ:CTRE).
Hedge fund interest in Caretrust REIT Inc (NASDAQ:CTRE) shares was flat during the third quarter. This is usually a negative indicator. 10 hedge funds that we track owned the stock on September 30, same as on June 30. At the end of this article we will also compare CTRE to other stocks including Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), Sonic Automotive Inc (NYSE:SAH), and Hi-Crush Partners LP (NYSE:HCLP) to get a better sense of its popularity.
Follow Caretrust Reit Inc. (NASDAQ:CTRE)
Follow Caretrust Reit Inc. (NASDAQ:CTRE)
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.
Rawpixel.com/Shutterstock.com
How have hedgies been trading Caretrust REIT Inc (NASDAQ:CTRE)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CTRE over the last 5 quarters, which has remained relatively stable, though underwhelming. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, one of the 10 largest hedge funds in the world, holds the biggest position in Caretrust REIT Inc (NASDAQ:CTRE). Millennium Management has a $21.4 million position in the stock. The second largest stake is held by Richard Driehaus of Driehaus Capital, with an $8.3 million position. Other professional money managers that hold long positions comprise Cliff Asness’ AQR Capital Management, David E. Shaw’s D E Shaw, 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.
Judging by the fact that Caretrust REIT Inc (NASDAQ:CTRE) has faced bearish sentiment from the smart money, it’s safe to say that there was a specific group of money managers that slashed their entire stakes heading into Q4. It’s worth mentioning that Jacob Gottlieb’s Visium Asset Management sold off the largest position of all the investors studied by Insider Monkey, comprising about $1.7 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also said goodbye to its small position.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Caretrust REIT Inc (NASDAQ:CTRE) but similarly valued. We will take a look at Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), Sonic Automotive Inc (NYSE:SAH), Hi-Crush Partners LP (NYSE:HCLP), and Tile Shop Hldgs, Inc. (NASDAQ:TTS). All of these stocks’ market caps match CTRE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMPH | 10 | 12522 | 0 |
| SAH | 13 | 38493 | 3 |
| HCLP | 10 | 72699 | -2 |
| TTS | 15 | 91252 | -6 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $48 million in CTRE’s case. Tile Shop Hldgs, Inc. (NASDAQ:TTS) is the most popular stock in this table. On the other hand Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Caretrust REIT Inc (NASDAQ:CTRE) is only as popular as the least popular stocks. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
