Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Central Pacific Financial Corp. (NYSE:CPF).
Central Pacific Financial Corp. (NYSE:CPF) investors should be aware of a decrease in enthusiasm from smart money of late. Central Pacific Financial Corp. (NYSE:CPF) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 18. There were 13 hedge funds in our database with CPF positions at the end of the first quarter. Our calculations also showed that CPF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s review the fresh hedge fund action regarding Central Pacific Financial Corp. (NYSE:CPF).
Do Hedge Funds Think CPF Is A Good Stock To Buy Now?
At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CPF over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the number one position in Central Pacific Financial Corp. (NYSE:CPF). Renaissance Technologies has a $17.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which holds a $7.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish encompass Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Polaris Capital Management allocated the biggest weight to Central Pacific Financial Corp. (NYSE:CPF), around 0.04% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to CPF.
Due to the fact that Central Pacific Financial Corp. (NYSE:CPF) has faced falling interest from the smart money, it’s easy to see that there is a sect of hedge funds that elected to cut their entire stakes by the end of the second quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $5.1 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund cut about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds by the end of the second quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Central Pacific Financial Corp. (NYSE:CPF) but similarly valued. These stocks are Antares Pharma Inc (NASDAQ:ATRS), New Senior Investment Group Inc (NYSE:SNR), Movado Group, Inc (NYSE:MOV), Calliditas Therapeutics AB (publ) (NASDAQ:CALT), Evelo Biosciences, Inc. (NASDAQ:EVLO), X Financial (NYSE:XYF), and Sohu.com Limited (NASDAQ:SOHU). This group of stocks’ market caps match CPF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATRS | 18 | 62450 | 1 |
| SNR | 18 | 95926 | 9 |
| MOV | 15 | 37263 | -2 |
| CALT | 4 | 29640 | -4 |
| EVLO | 6 | 4123 | 1 |
| XYF | 3 | 7411 | -1 |
| SOHU | 12 | 93328 | -1 |
| Average | 10.9 | 47163 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $35 million in CPF’s case. Antares Pharma Inc (NASDAQ:ATRS) is the most popular stock in this table. On the other hand X Financial (NYSE:XYF) is the least popular one with only 3 bullish hedge fund positions. Central Pacific Financial Corp. (NYSE:CPF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPF is 42. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately CPF wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CPF investors were disappointed as the stock returned 0.7% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Central Pacific Financial Corp (NYSE:CPF)
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Disclosure: None. This article was originally published at Insider Monkey.
