The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. What do these smart investors think about Colfax Corporation (NYSE:CFX)?
Is CFX stock a buy? Colfax Corporation (NYSE:CFX) shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. Colfax Corporation (NYSE:CFX) was in 36 hedge funds’ portfolios at the end of December. The all time high for this statistic is 45. There were 45 hedge funds in our database with CFX holdings at the end of September. Our calculations also showed that CFX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Michael Gelband of ExodusPoint Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to view the fresh hedge fund action regarding Colfax Corporation (NYSE:CFX).
Do Hedge Funds Think CFX Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CFX over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Diamond Hill Capital was the largest shareholder of Colfax Corporation (NYSE:CFX), with a stake worth $135.5 million reported as of the end of December. Trailing Diamond Hill Capital was Cardinal Capital, which amassed a stake valued at $116.5 million. Royce & Associates, Highbridge Capital Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to Colfax Corporation (NYSE:CFX), around 5.04% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, dishing out 3.4 percent of its 13F equity portfolio to CFX.
Seeing as Colfax Corporation (NYSE:CFX) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of funds who were dropping their full holdings heading into Q1. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management cut the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $31.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $9.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 9 funds heading into Q1.
Let’s go over hedge fund activity in other stocks similar to Colfax Corporation (NYSE:CFX). We will take a look at Immunovant, Inc. (NASDAQ:IMVT), Quaker Chemical Corp (NYSE:KWR), Crane Co. (NYSE:CR), SAGE Therapeutics Inc (NASDAQ:SAGE), ICU Medical, Inc. (NASDAQ:ICUI), MAXIMUS, Inc. (NYSE:MMS), and RBC Bearings Incorporated (NASDAQ:ROLL). All of these stocks’ market caps are similar to CFX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IMVT | 36 | 578066 | 7 |
| KWR | 13 | 187153 | -3 |
| CR | 24 | 265292 | -5 |
| SAGE | 29 | 622755 | -5 |
| ICUI | 22 | 359044 | -9 |
| MMS | 24 | 144428 | 2 |
| ROLL | 14 | 48268 | -4 |
| Average | 23.1 | 315001 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $315 million. That figure was $824 million in CFX’s case. Immunovant, Inc. (NASDAQ:IMVT) is the most popular stock in this table. On the other hand Quaker Chemical Corp (NYSE:KWR) is the least popular one with only 13 bullish hedge fund positions. Colfax Corporation (NYSE:CFX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CFX is 70. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on CFX as the stock returned 16% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
