Does Churchill Capital Corp (NYSE:CCC) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Churchill Capital Corp (NYSE:CCC) a bargain? The best stock pickers are turning less bullish. The number of bullish hedge fund bets were trimmed by 1 recently. Our calculations also showed that ccc isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a look at the latest hedge fund action surrounding Churchill Capital Corp (NYSE:CCC).
What does the smart money think about Churchill Capital Corp (NYSE:CCC)?
At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CCC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Churchill Capital Corp (NYSE:CCC) was held by Magnetar Capital, which reported holding $52.5 million worth of stock at the end of December. It was followed by Brahman Capital with a $36.7 million position. Other investors bullish on the company included Millennium Management, Highbridge Capital Management, and BlueCrest Capital Mgmt..
Judging by the fact that Churchill Capital Corp (NYSE:CCC) has faced falling interest from the smart money, logic holds that there lies a certain “tier” of hedge funds who sold off their entire stakes in the third quarter. It’s worth mentioning that Alec Litowitz and Ross Laser’s Magnetar Capital sold off the biggest position of the 700 funds followed by Insider Monkey, valued at close to $55.8 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund dropped about $26.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Churchill Capital Corp (NYSE:CCC) but similarly valued. These stocks are NextPoint Residential Trust Inc (NYSE:NXRT), Chatham Lodging Trust (NYSE:CLDT), Duluth Holdings Inc. (NASDAQ:DLTH), and Washington Trust Bancorp, Inc. (NASDAQ:WASH). This group of stocks’ market valuations are similar to CCC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NXRT | 9 | 139879 | 0 |
| CLDT | 10 | 44534 | 3 |
| DLTH | 8 | 12500 | -2 |
| WASH | 6 | 24910 | -2 |
| Average | 8.25 | 55456 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $317 million in CCC’s case. Chatham Lodging Trust (NYSE:CLDT) is the most popular stock in this table. On the other hand Washington Trust Bancorp, Inc. (NASDAQ:WASH) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Churchill Capital Corp (NYSE:CCC) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on CCC as the stock returned 45.9% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
