Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Core-Mark Holding Company, Inc. (NASDAQ:CORE).
Is Core-Mark Holding Company undervalued? The best stock pickers are getting less bullish. The number of bullish hedge fund bets was trimmed by 9 recently. CORE was in 9 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with CORE positions at the end of the previous quarter. At the end of this article we will also compare CORE to other stocks, including Sabra Health Care REIT Inc (NASDAQ:SBRA), Compania de Minas Buenaventura SA (ADR) (NYSE:BVN), and Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) to get a better sense of its popularity.
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At the moment there are plenty of tools stock traders can use to analyze their stock investments. A couple of the most underrated tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the market by a very impressive amount (see the details here).
With all of this in mind, we’re going to take a look at the recent action regarding Core-Mark Holding Company, Inc. (NASDAQ:CORE).
How have hedgies been trading Core-Mark Holding Company, Inc. (NASDAQ:CORE)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Core-Mark Holding Company, Inc. (NASDAQ:CORE). Royce & Associates has a $33 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund is Renaissance Technologies, with a $18.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass Charles Paquelet’s Skylands Capital, Cliff Asness’ AQR Capital Management, and Mario Gabelli’s GAMCO Investors.
Due to the fact that Core-Mark Holding Company, Inc. (NASDAQ:CORE) has faced declining sentiment from hedge fund managers, we can see that there is a sect of funds that slashed their full holdings by the end of the third quarter. Interestingly, Joel Greenblatt’s Gotham Asset Management cut the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $4.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $2.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 9 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Core-Mark Holding Company, Inc. (NASDAQ:CORE). We will take a look at Sabra Health Care REIT Inc (NASDAQ:SBRA), Compania de Minas Buenaventura SA (ADR) (NYSE:BVN), Nexstar Broadcasting Group, Inc. (NASDAQ:NXST), and Magellan Health Services Inc (NASDAQ:MGLN). This group of stocks’ market caps are closest to CORE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBRA | 8 | 61618 | -4 |
| BVN | 7 | 8211 | -2 |
| NXST | 34 | 537161 | 7 |
| MGLN | 18 | 256703 | 4 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $67 million in CORE’s case. Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) is the least popular one with only 7 bullish hedge fund positions. Core-Mark Holding Company, Inc. (NASDAQ:CORE) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NXST might be a better candidate to consider a long position.
