We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Clarus Corporation (NASDAQ:CLAR).
Clarus Corporation (NASDAQ:CLAR) has experienced a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that CLAR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the latest hedge fund action encompassing Clarus Corporation (NASDAQ:CLAR).
Hedge fund activity in Clarus Corporation (NASDAQ:CLAR)
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in CLAR 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.
Of the funds tracked by Insider Monkey, Greenhouse Funds, managed by Joe Milano, holds the largest position in Clarus Corporation (NASDAQ:CLAR). Greenhouse Funds has a $24.6 million position in the stock, comprising 5% of its 13F portfolio. On Greenhouse Funds’s heels is Renaissance Technologies, which holds a $10.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Harding’s Winton Capital Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to Clarus Corporation (NASDAQ:CLAR), around 4.99% of its 13F portfolio. Wynnefield Capital is also relatively very bullish on the stock, setting aside 0.44 percent of its 13F equity portfolio to CLAR.
Due to the fact that Clarus Corporation (NASDAQ:CLAR) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there were a few money managers that decided to sell off their full holdings heading into Q4. It’s worth mentioning that Brian C. Freckmann’s Lyon Street Capital dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $0.4 million in stock, and Bruce Kovner’s Caxton Associates was right behind this move, as the fund cut about $0.2 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Clarus Corporation (NASDAQ:CLAR) but similarly valued. We will take a look at Limelight Networks, Inc. (NASDAQ:LLNW), CymaBay Therapeutics Inc (NASDAQ:CBAY), Adverum Biotechnologies, Inc. (NASDAQ:ADVM), and Teekay Tankers Ltd. (NYSE:TNK). This group of stocks’ market valuations match CLAR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LLNW | 13 | 40097 | 2 |
| CBAY | 21 | 155764 | -3 |
| ADVM | 11 | 83191 | -4 |
| TNK | 18 | 30256 | 6 |
| Average | 15.75 | 77327 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $48 million in CLAR’s case. CymaBay Therapeutics Inc (NASDAQ:CBAY) is the most popular stock in this table. On the other hand Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the least popular one with only 11 bullish hedge fund positions. Clarus Corporation (NASDAQ:CLAR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on CLAR, though not to the same extent, as the stock returned 7.6% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
