It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Castle Brands Inc (NYSEMKT:ROX).
Castle Brands Inc (NYSEMKT:ROX) was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. ROX investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 5 hedge funds in our database with ROX holdings at the end of the previous quarter. At the end of this article we will also compare ROX to other stocks including Westfield Financial, Inc. (NASDAQ:WFD), Radiant Logistics, Inc. (NYSEAMEX:RLGT), and Aspen Aerogels Inc (NYSE:ASPN) to get a better sense of its popularity.
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How are hedge funds trading Castle Brands Inc (NYSEMKT:ROX)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in ROX heading into this year. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Coe’s Coe Capital Management has the largest position in Castle Brands Inc (NYSEMKT:ROX), worth close to $0.5 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Manatuck Hill Partners, led by Mark Broach, holding a $0.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Israel Englander’s Millennium Management, one of the largest hedge funds in the world, Paul Tudor Jones’ Tudor Investment Corp and Jim Simons’ Renaissance Technologies. 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.
Let’s now review hedge fund activity in other stocks similar to Castle Brands Inc (NYSEMKT:ROX). We will take a look at Westfield Financial, Inc. (NASDAQ:WFD), Radiant Logistics, Inc. (NYSEAMEX:RLGT), Aspen Aerogels Inc (NYSE:ASPN), and Cadiz Inc (NASDAQ:CDZI). This group of stocks’ market caps match ROX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WFD | 4 | 24395 | 0 |
| RLGT | 7 | 9367 | 1 |
| ASPN | 4 | 8274 | 0 |
| CDZI | 3 | 12986 | -3 |
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 $14 million. That figure was $1 million in ROX’s case. Radiant Logistics, Inc. (NYSEAMEX:RLGT) is the most popular stock in this table. On the other hand Cadiz Inc (NASDAQ:CDZI) is the least popular one with only 3 bullish hedge fund positions. Castle Brands Inc (NYSEMKT:ROX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RLGT might be a better candidate to consider taking a long position in.
