With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Central Fund of Canada Limited (USA) (NYSEAMEX:CEF).
Is Central Fund of Canada Limited an attractive investment now? Money managers are in an optimistic mood. The number of long hedge fund positions inched up by 1 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Verint Systems Inc. (NASDAQ:VRNT), PBF Energy Inc (NYSE:PBF), and AllianceBernstein Holding LP (NYSE:AB) to gather more data points.
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In the 21st century investor’s toolkit there are a large number of metrics stock traders put to use to value stocks. A pair of the most innovative metrics are hedge fund and insider trading indicators. we have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the broader indices by a solid amount (see the details here).
With all of this in mind, we’re going to analyze the new action regarding Central Fund of Canada Limited (USA) (NYSEAMEX:CEF).
What does the smart money think about Central Fund of Canada Limited (USA) (NYSEAMEX:CEF)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mariner Investment Group, managed by William Michaelcheck, holds the largest position in Central Fund of Canada Limited (USA) (NYSEAMEX:CEF). Mariner Investment Group has a $7.6 million position in the stock, comprising 1.5% of its 13F portfolio. On Mariner Investment Group’s heels is Millennium Management, led by Israel Englander, holding a $3.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Eric Sprott’s Sprott Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
As one would reasonably expect, specific money managers were breaking ground themselves. Millennium Management established the most outsized position in Central Fund of Canada Limited (USA) (NYSEAMEX:CEF). Millennium Management had $3.2 million invested in the company at the end of the quarter. Springbok Capital also initiated a small position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Central Fund of Canada Limited (USA) (NYSEAMEX:CEF) but similarly valued. These stocks are Verint Systems Inc. (NASDAQ:VRNT), PBF Energy Inc (NYSE:PBF), AllianceBernstein Holding LP (NYSE:AB), and Platform Specialty Products Corp (NYSE:PAH). This group of stocks’ market caps match CEF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRNT | 36 | 331091 | 3 |
| PBF | 27 | 783666 | -5 |
| AB | 8 | 78215 | -4 |
| PAH | 40 | 1382497 | -11 |
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $644 million. That figure was $11 million in CEF’s case. Platform Specialty Products Corp (NYSE:PAH) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Central Fund of Canada Limited (USA) (NYSEAMEX:CEF) is even less popular than AB. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
