Is Seacor Holdings, Inc. (NYSE:CKH) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Seacor Holdings, Inc. (NYSE:CKH) worth your attention right now? The smart money is becoming more confident. The number of bullish hedge fund bets rose by 3 in recent months. Our calculations also showed that CKH isn’t among the 30 most popular stocks among hedge funds (see the video below). CKH was in 14 hedge funds’ portfolios at the end of the second quarter of 2019. There were 11 hedge funds in our database with CKH holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the key hedge fund action encompassing Seacor Holdings, Inc. (NYSE:CKH).
What does smart money think about Seacor Holdings, Inc. (NYSE:CKH)?
At Q2’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the first quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in CKH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the largest position in Seacor Holdings, Inc. (NYSE:CKH), worth close to $66 million, comprising 0.6% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $57.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Consequently, key money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most outsized position in Seacor Holdings, Inc. (NYSE:CKH). Marshall Wace LLP had $2.4 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $1.4 million investment in the stock during the quarter. The following funds were also among the new CKH investors: Ken Griffin’s Citadel Investment Group, Paul Tudor Jones’s Tudor Investment Corp, and Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Seacor Holdings, Inc. (NYSE:CKH) but similarly valued. We will take a look at Chatham Lodging Trust (NYSE:CLDT), FARO Technologies, Inc. (NASDAQ:FARO), Westlake Chemical Partners LP (NYSE:WLKP), and Entercom Communications Corp. (NYSE:ETM). This group of stocks’ market values match CKH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLDT | 8 | 53463 | 1 |
| FARO | 7 | 45598 | 0 |
| WLKP | 3 | 8610 | 0 |
| ETM | 19 | 79346 | -2 |
| Average | 9.25 | 46754 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $138 million in CKH’s case. Entercom Communications Corp. (NYSE:ETM) is the most popular stock in this table. On the other hand Westlake Chemical Partners LP (NYSE:WLKP) is the least popular one with only 3 bullish hedge fund positions. Seacor Holdings, Inc. (NYSE:CKH) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CKH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CKH were disappointed as the stock returned -0.9% during the third quarter 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.
