Amid an overall bull market, many stocks that smart money investors were collectively bullish on 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. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Commercial Vehicle Group, Inc. (NASDAQ:CVGI) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. CVGI was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. There were 13 hedge funds in our database with CVGI positions at the end of the previous quarter. Our calculations also showed that CVGI 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.
According to most market participants, hedge funds are assumed to be underperforming, old financial tools of the past. While there are over 8000 funds trading at the moment, Our researchers hone in on the upper echelon of this group, about 750 funds. These hedge fund managers handle bulk of all hedge funds’ total capital, and by watching their first-class investments, Insider Monkey has uncovered several investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum 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 .
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 Commercial Vehicle Group, Inc. (NASDAQ:CVGI).
What have hedge funds been doing with Commercial Vehicle Group, Inc. (NASDAQ:CVGI)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CVGI over the last 17 quarters. 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, Renaissance Technologies has the largest position in Commercial Vehicle Group, Inc. (NASDAQ:CVGI), worth close to $15.4 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, holding a $13.7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish include Cliff Asness’s AQR Capital Management, Douglas Dethy’s DC Capital Partners and David E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position DC Capital Partners allocated the biggest weight to Commercial Vehicle Group, Inc. (NASDAQ:CVGI), around 3.8% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.24 percent of its 13F equity portfolio to CVGI.
Judging by the fact that Commercial Vehicle Group, Inc. (NASDAQ:CVGI) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that slashed their positions entirely by the end of the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group dropped the largest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $0.4 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund cut about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Commercial Vehicle Group, Inc. (NASDAQ:CVGI) but similarly valued. We will take a look at Telenav Inc (NASDAQ:TNAV), New Germany Fund, Inc. (The) (NYSE:GF), Kaleido BioSciences, Inc. (NASDAQ:KLDO), and Applied Optoelectronics Inc (NASDAQ:AAOI). All of these stocks’ market caps resemble CVGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TNAV | 12 | 52973 | 0 |
| GF | 1 | 309 | 0 |
| KLDO | 5 | 7555 | 0 |
| AAOI | 10 | 24696 | -3 |
| Average | 7 | 21383 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $47 million in CVGI’s case. Telenav Inc (NASDAQ:TNAV) is the most popular stock in this table. On the other hand New Germany Fund, Inc. (The) (NYSE:GF) is the least popular one with only 1 bullish hedge fund positions. Commercial Vehicle Group, Inc. (NASDAQ:CVGI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately CVGI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CVGI were disappointed as the stock returned -1% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
