Is Celadon Group, Inc. (CGI) A Good Stock To Buy?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Celadon Group, Inc. (NYSE:CGI).

Is Celadon Group, Inc. (NYSE:CGI) the right investment to pursue these days? The best stock pickers are taking a pessimistic view. The number of long hedge fund positions retreated by 2 in recent months. CGI was in 14 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with CGI holdings at the end of the previous quarter. At the end of this article we will also compare CGI to other stocks, including Farmer Brothers Co. (NASDAQ:FARM), Investment Technology Group (NYSE:ITG), and ANI Pharmaceuticals Inc (NASDAQ:ANIP) to get a better sense of its popularity.

In the eyes of most stock holders, hedge funds are assumed to be slow, old financial tools of the past. While there are over 8000 funds with their doors open at the moment, Our experts hone in on the moguls of this club, approximately 700 funds. These hedge fund managers command most of the hedge fund industry’s total asset base, and by keeping an eye on their first-class picks, Insider Monkey has unearthed numerous investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, we’re going to take a gander at the recent action encompassing Celadon Group, Inc. (NYSE:CGI).

What does the smart money think about Celadon Group, Inc. (NYSE:CGI)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, down by 13% from the second quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in Celadon Group, Inc. (NYSE:CGI). The fund has a $7.3 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second largest stake is held by Newland Capital, managed by Ken Brodkowitz and Mike Vermut, which holds an $7 million stake; 6.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain Jim Simons’s Renaissance Technologies, Alexander Mitchell’s Scopus Asset Management and Chao Ku’s Nine Chapters Capital Management.

Seeing as Celadon Group, Inc. (NYSE:CGI) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds that elected to cut their positions entirely heading into Q4. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, totaling close to $3 million in stock, and Richard S. Meisenberg’s ACK Asset Management was right behind this move, as the fund dropped about $0.7 million worth of CGI shares. These moves are interesting, as total hedge fund interest fell by 2 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Celadon Group, Inc. (NYSE:CGI) but similarly valued. These stocks are Farmer Brothers Co. (NASDAQ:FARM), Investment Technology Group (NYSE:ITG), ANI Pharmaceuticals Inc (NASDAQ:ANIP), and Lattice Semiconductor (NASDAQ:LSCC). All of these stocks’ market caps are similar to CGI’s market cap.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was a disappointing $27 million in CGI’s case. Investment Technology Group (NYSE:ITG) is the most popular stock in this table, while Lattice Semiconductor (NASDAQ:LSCC) is at the other end of the specter with only 8 bullish hedge fund positions. Celadon Group, Inc. (NYSE:CGI) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, yet we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ITG might be a better candidate to consider a long position.