Is CPI Aerostructures, Inc. (CVU) A Good Stock To Buy?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards CPI Aerostructures, Inc. (NYSE:CVU).

CPI Aerostructures, Inc. (NYSE:CVU) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. CVU investors should be aware of an increase in support from the world’s most elite money managers of late. There were 2 hedge funds in our database with CVU holdings at the end of December. Our calculations also showed that CVU isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Fred DiSanto of Ancora Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the key hedge fund action surrounding CPI Aerostructures, Inc. (NYSE:CVU).

Do Hedge Funds Think CVU Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2020. On the other hand, there were a total of 3 hedge funds with a bullish position in CVU a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in CPI Aerostructures, Inc. (NYSE:CVU), which was worth $4 million at the end of the fourth quarter. On the second spot was Ancora Advisors which amassed $0.6 million worth of shares. Huber Capital Management 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 Huber Capital Management allocated the biggest weight to CPI Aerostructures, Inc. (NYSE:CVU), around 0.07% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to CVU.

Now, specific money managers have jumped into CPI Aerostructures, Inc. (NYSE:CVU) headfirst. Huber Capital Management, managed by Joe Huber, established the biggest position in CPI Aerostructures, Inc. (NYSE:CVU). Huber Capital Management had $0.2 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CPI Aerostructures, Inc. (NYSE:CVU) but similarly valued. We will take a look at Sonim Technologies, Inc. (NASDAQ:SONM), Washington Prime Group Inc. (NYSE:WPG), Sunlands Technology Group (NYSE:STG), Applied DNA Sciences Inc (NASDAQ:APDN), Akers Biosciences Inc (NASDAQ:AKER), Kintara Therapeutics, Inc. (NASDAQ:KTRA), and Sotherly Hotels Inc (NASDAQ:SOHO). This group of stocks’ market caps are similar to CVU’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $5 million in CVU’s case. Washington Prime Group Inc. (NYSE:WPG) is the most popular stock in this table. On the other hand Applied DNA Sciences Inc (NASDAQ:APDN) is the least popular one with only 1 bullish hedge fund positions. CPI Aerostructures, Inc. (NYSE:CVU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVU is 44. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately CVU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CVU investors were disappointed as the stock returned -15.2% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

Disclosure: None. This article was originally published at Insider Monkey.