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 Celadon Group, Inc. (NYSE:CGI) .
Celadon Group, Inc. (NYSE:CGI) shareholders have witnessed an increase in enthusiasm from smart money of late. CGI was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. There were 4 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 Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), Landcadia Holdings Inc. (NASDAQ:LCAHU), and Easterly Acquisition Corp (NASDAQ:EACQ) to get a better sense of its popularity.
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.
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Now, let’s take a peek at the latest action encompassing Celadon Group, Inc. (NYSE:CGI).
How have hedgies been trading Celadon Group, Inc. (NYSE:CGI)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a boost of 125% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in CGI heading into this year. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Alexander Mitchell’s Scopus Asset Management has the biggest position in Celadon Group, Inc. (NYSE:CGI), worth close to $3.9 million. On Scopus Asset Management’s heels is Ken Griffin’s Citadel Investment Group, which holds a $2.5 million position. Some other peers that hold long positions contain John D. Gillespie’s Prospector Partners, Chuck Royce’s Royce & Associates and Jim Simons’ Renaissance Technologies which is one of the largest hedge funds in the world. 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.
Consequently, specific money managers were leading the bulls’ herd. Scopus Asset Management assembled the largest position in Celadon Group, Inc. (NYSE:CGI), followed by Ken Griffin’s Citadel Investment Group. The other funds with brand new CGI positions are Royce & Associates, Renaissance Technologies, and Neil Chriss’s Hutchin Hill Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Celadon Group, Inc. (NYSE:CGI) but similarly valued. We will take a look at Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), Landcadia Holdings Inc. (NASDAQ:LCAHU), Easterly Acquisition Corp (NASDAQ:EACQ), and Hovnanian Enterprises, Inc. (NYSE:HOV). All of these stocks’ market caps resemble CGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NGVC | 6 | 10658 | 1 |
| LCAHU | 14 | 158796 | 2 |
| EACQ | 11 | 78069 | 0 |
| HOV | 10 | 13243 | 1 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $13 million in CGI’s case. Landcadia Holdings Inc. (NASDAQ:LCAHU) is the most popular stock in this table. On the other hand Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC) is the least popular one with only 6 bullish hedge fund positions. Celadon Group, Inc. (NYSE:CGI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LCAHU might be a better candidate to consider taking a long position in.
Disclosure: None
