Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Celestica Inc. (NYSE:CLS) has experienced an increase in support from the world’s most elite money managers in recent months. CLS was in 15 hedge funds’ portfolios at the end of March. There were 14 hedge funds in our database with CLS holdings at the end of the previous quarter. Our calculations also showed that CLS isn’t among the 30 most popular stocks among hedge funds.
According to most traders, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are more than 8000 funds trading at present, Our researchers look at the elite of this club, approximately 750 funds. Most estimates calculate that this group of people handle the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their top equity investments, Insider Monkey has uncovered a few investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points annually since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We’re going to take a gander at the latest hedge fund action regarding Celestica Inc. (NYSE:CLS).
Hedge fund activity in Celestica Inc. (NYSE:CLS)
Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in CLS over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Celestica Inc. (NYSE:CLS), which was worth $33.6 million at the end of the first quarter. On the second spot was Royce & Associates which amassed $16.8 million worth of shares. Moreover, Hawk Ridge Management, Arrowstreet Capital, and D E Shaw were also bullish on Celestica Inc. (NYSE:CLS), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, created the most outsized position in Celestica Inc. (NYSE:CLS). Renaissance Technologies had $1.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $0.9 million position during the quarter. The only other fund with a new position in the stock is Peter Muller’s PDT Partners.
Let’s now review hedge fund activity in other stocks similar to Celestica Inc. (NYSE:CLS). These stocks are BJ’s Restaurants, Inc. (NASDAQ:BJRI), Sandstorm Gold Ltd. (NYSE:SAND), Hailiang Education Group Inc. (NASDAQ:HLG), and Bain Capital Specialty Finance, Inc. (NYSE:BCSF). This group of stocks’ market valuations match CLS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BJRI | 19 | 150999 | -2 |
| SAND | 12 | 44973 | 3 |
| HLG | 3 | 5277 | 0 |
| BCSF | 2 | 29694 | -1 |
| Average | 9 | 57736 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $82 million in CLS’s case. BJ’s Restaurants, Inc. (NASDAQ:BJRI) is the most popular stock in this table. On the other hand Bain Capital Specialty Finance, Inc. (NYSE:BCSF) is the least popular one with only 2 bullish hedge fund positions. Celestica Inc. (NYSE:CLS) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CLS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLS were disappointed as the stock returned -23.4% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
