At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Castle Brands Inc (NYSEAMEX:ROX) a buy, sell, or hold? Money managers are becoming less confident. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH), TeleCommunication Systems, Inc. (NASDAQ:TSYS), and Tilly’s Inc (NYSE:TLYS) to gather more data points.
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With all of this in mind, let’s check out the latest action surrounding Castle Brands Inc (NYSEAMEX:ROX).
What have hedge funds been doing with Castle Brands Inc (NYSEAMEX:ROX)?
When looking at the institutional investors followed by Insider Monkey, Coe Capital Management, managed by Mark Coe, holds the most valuable position in Castle Brands Inc (NYSEAMEX:ROX). Coe Capital Management has a $1 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Murray Stahl of Horizon Asset Management, with a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Paul Tudor Jones’s Tudor Investment Corp, Ken Griffin’s Citadel Investment Group.
There was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Coe Capital Management).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Castle Brands Inc (NYSEAMEX:ROX) but similarly valued. These stocks are ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH), TeleCommunication Systems, Inc. (NASDAQ:TSYS), Tilly’s Inc (NYSE:TLYS), and Capitala Finance Corp (NASDAQ:CPTA). This group of stocks’ market caps resemble ROX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCIH | 4 | 4566 | -7 |
| TSYS | 12 | 41010 | -1 |
| TLYS | 8 | 6551 | -1 |
| CPTA | 4 | 1709 | -1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $13 million.That figure was $1 million in ROX’s case. TeleCommunication Systems, Inc. (NASDAQ:TSYS) is the most popular stock in this table. On the other hand ChinaCache Internatnl Hldgs Ltd (ADR) (NASDAQ:CCIH) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Castle Brands Inc (NYSEAMEX:ROX) is even less popular than CCIH. 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.
