Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018 as investors first worried over the possible ramifications of rising interest rates and the escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only about 60% S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Clearfield, Inc. (NASDAQ:CLFD) and see how the stock is affected by the recent hedge fund activity.
Clearfield, Inc. (NASDAQ:CLFD) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of the third quarter of 2019. At the end of this article we will also compare CLFD to other stocks including Cytosorbents Corporation (NASDAQ:CTSO), LiqTech International Inc (NASDAQ:LIQT), and Titan International Inc (NYSE:TWI) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are assumed to be slow, outdated financial tools of the past. While there are over 8000 funds with their doors open at the moment, Our experts hone in on the leaders of this group, around 750 funds. These money managers handle the majority of the smart money’s total capital, and by observing their highest performing equity investments, Insider Monkey has deciphered a few investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
John Overdeck of Two Sigma Advisors
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s take a peek at the fresh hedge fund action encompassing Clearfield, Inc. (NASDAQ:CLFD).
What have hedge funds been doing with Clearfield, Inc. (NASDAQ:CLFD)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CLFD over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Clearfield, Inc. (NASDAQ:CLFD), with a stake worth $6.7 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $1 million. Two Sigma Advisors was 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 Royce & Associates allocated the biggest weight to Clearfield, Inc. (NASDAQ:CLFD), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CLFD.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Clearfield, Inc. (NASDAQ:CLFD) but similarly valued. We will take a look at Cytosorbents Corporation (NASDAQ:CTSO), LiqTech International Inc (NASDAQ:LIQT), Titan International Inc (NYSE:TWI), and Tile Shop Holdings, Inc. (NASDAQ:TTS). All of these stocks’ market caps are similar to CLFD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTSO | 5 | 4663 | 1 |
| LIQT | 8 | 7582 | 3 |
| TWI | 9 | 41210 | -1 |
| TTS | 10 | 7226 | -2 |
| Average | 8 | 15170 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $8 million in CLFD’s case. Tile Shop Holdings, Inc. (NASDAQ:TTS) is the most popular stock in this table. On the other hand Cytosorbents Corporation (NASDAQ:CTSO) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Clearfield, Inc. (NASDAQ:CLFD) is even less popular than CTSO. Hedge funds clearly dropped the ball on CLFD as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 CLFD as the stock returned 14.5% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
