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 Core Molding Technologies, Inc. (NYSE:CMT).
Core Molding Technologies, Inc. (NYSE:CMT) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. At the end of this article we will also compare CMT to other stocks including Educational Development Corporation (NASDAQ:EDUC), Alio Gold Inc. (NYSE:ALO), and FuelCell Energy, Inc. (NASDAQ:FCEL) 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In the eyes of most investors, hedge funds are assumed to be underperforming, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at present, We choose to focus on the top tier of this club, approximately 750 funds. Most estimates calculate that this group of people have their hands on most of all hedge funds’ total asset base, and by tracking their unrivaled stock picks, Insider Monkey has determined many investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per 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 .
Mario Gabelli of GAMCO Investors
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. With all of this in mind let’s take a glance at the fresh hedge fund action surrounding Core Molding Technologies, Inc. (NYSE:CMT).
How have hedgies been trading Core Molding Technologies, Inc. (NYSE:CMT)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CMT over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies holds the number one position in Core Molding Technologies, Inc. (NYSE:CMT). Renaissance Technologies has a $3.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which holds a $3.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Jeffrey Gendell’s Tontine Asset Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to Core Molding Technologies, Inc. (NYSE:CMT), around 0.33% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to CMT.
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 check out hedge fund activity in other stocks similar to Core Molding Technologies, Inc. (NYSE:CMT). We will take a look at Educational Development Corporation (NASDAQ:EDUC), Alio Gold Inc. (NYSE:ALO), FuelCell Energy, Inc. (NASDAQ:FCEL), and Melinta Therapeutics, Inc. (NASDAQ:MLNT). This group of stocks’ market caps match CMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EDUC | 1 | 1323 | 0 |
| ALO | 3 | 1856 | 0 |
| FCEL | 3 | 360 | -4 |
| MLNT | 4 | 2690 | -2 |
| Average | 2.75 | 1557 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $10 million in CMT’s case. Melinta Therapeutics, Inc. (NASDAQ:MLNT) is the most popular stock in this table. On the other hand Educational Development Corporation (NASDAQ:EDUC) is the least popular one with only 1 bullish hedge fund positions. Core Molding Technologies, Inc. (NYSE:CMT) 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 CMT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CMT were disappointed as the stock returned -42.4% 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.