Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards cbdMD, Inc. (NYSE:YCBD) to find out whether there were any major changes in hedge funds’ views.
cbdMD, Inc. (NYSE:YCBD) has experienced a decrease in enthusiasm from smart money recently. cbdMD, Inc. (NYSE:YCBD) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 4. There were 4 hedge funds in our database with YCBD positions at the end of the second quarter. Our calculations also showed that YCBD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are tons of metrics stock market investors put to use to assess stocks. A couple of the most innovative metrics are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top fund managers can outclass the market by a significant margin (see the details here).
David Harding of Winton Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Now we’re going to go over the recent hedge fund action encompassing cbdMD, Inc. (NYSE:YCBD).
How are hedge funds trading cbdMD, Inc. (NYSE:YCBD)?
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in YCBD over the last 21 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the most valuable position in cbdMD, Inc. (NYSE:YCBD), worth close to $0.5 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $0.3 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish encompass David Harding’s Winton Capital Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners and . In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to cbdMD, Inc. (NYSE:YCBD), around 0.0027% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0005 percent of its 13F equity portfolio to YCBD.
Since cbdMD, Inc. (NYSE:YCBD) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that elected to cut their entire stakes last quarter. Intriguingly, Donald Sussman’s Paloma Partners sold off the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $0.3 million in stock. Karim Abbadi and Edward McBride’s fund, Centiva Capital, also sold off its stock, about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to cbdMD, Inc. (NYSE:YCBD). We will take a look at RR Donnelley & Sons Company (NYSE:RRD), Qualigen Therapeutics, Inc. (NASDAQ:QLGN), Lizhi Inc. (NASDAQ:LIZI), The Goldfield Corporation (NYSE:GV), United Security Bancshares (NASDAQ:UBFO), Capricor Therapeutics, Inc. (NASDAQ:CAPR), and HireQuest, Inc. (NASDAQ:HQI). This group of stocks’ market values are similar to YCBD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RRD | 8 | 16264 | -5 |
| QLGN | 1 | 266 | 0 |
| LIZI | 2 | 133 | 1 |
| GV | 1 | 9051 | 0 |
| UBFO | 3 | 1563 | 0 |
| CAPR | 1 | 186 | -3 |
| HQI | 1 | 90 | -1 |
| Average | 2.4 | 3936 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $1 million in YCBD’s case. RR Donnelley & Sons Company (NYSE:RRD) is the most popular stock in this table. On the other hand Qualigen Therapeutics, Inc. (NASDAQ:QLGN) is the least popular one with only 1 bullish hedge fund positions. cbdMD, Inc. (NYSE:YCBD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for YCBD is 40.8. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about betting on YCBD as the stock returned 31.5% since the end of Q3 (through 11/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.