“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Clarivate Analytics Plc (NYSE:CCC) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Clarivate Analytics Plc (NYSE:CCC) was in 22 hedge funds’ portfolios at the end of the first quarter of 2019. CCC investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 24 hedge funds in our database with CCC holdings at the end of the previous quarter. Our calculations also showed that CCC isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are assumed to be underperforming, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, Our experts look at the masters of this group, about 750 funds. These money managers oversee the lion’s share of the smart money’s total asset base, and by watching their highest performing investments, Insider Monkey has figured out a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% 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 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to check out the key hedge fund action regarding Clarivate Analytics Plc (NYSE:CCC).
Hedge fund activity in Clarivate Analytics Plc (NYSE:CCC)
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in CCC a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Brahman Capital was the largest shareholder of Clarivate Analytics Plc (NYSE:CCC), with a stake worth $89 million reported as of the end of March. Trailing Brahman Capital was Magnetar Capital, which amassed a stake valued at $73.9 million. Luxor Capital Group, Select Equity Group, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Since Clarivate Analytics Plc (NYSE:CCC) has witnessed a decline in interest from hedge fund managers, we can see that there exists a select few money managers who sold off their full holdings last quarter. It’s worth mentioning that Glenn Russell Dubin’s Highbridge Capital Management dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $23.9 million in stock. Greg Poole’s fund, Echo Street Capital Management, also said goodbye to its stock, about $18.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to Clarivate Analytics Plc (NYSE:CCC). We will take a look at Materion Corp (NYSE:MTRN), 1st Source Corporation (NASDAQ:SRCE), Lakeland Financial Corporation (NASDAQ:LKFN), and National HealthCare Corporation (NYSE:NHC). All of these stocks’ market caps match CCC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTRN | 17 | 90597 | 0 |
| SRCE | 9 | 26986 | 0 |
| LKFN | 11 | 18601 | 0 |
| NHC | 9 | 52872 | 0 |
| Average | 11.5 | 47264 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $527 million in CCC’s case. Materion Corp (NYSE:MTRN) is the most popular stock in this table. On the other hand 1st Source Corporation (NASDAQ:SRCE) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Clarivate Analytics Plc (NYSE:CCC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CCC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CCC were disappointed as the stock returned -2.5% 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 in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
