Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
CoreCivic Inc (NYSE:CXW) has seen an increase in activity from the world’s largest hedge funds recently, as ownership of the stock among them surged in Q3. At the end of this article we will also compare CXW to other stocks including Brunswick Corporation (NYSE:BC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), and Olin Corporation (NYSE:OLN) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What have hedge funds been doing with CoreCivic Inc (NYSE:CXW)?
Heading into the fourth quarter of 2016, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 80% leap from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in CoreCivic Inc (NYSE:CXW). Millennium Management has a $38.3 million position in the stock. The second largest stake is held by Paul Singer of Elliott Management, with a $32.1 million position. Other professional money managers that are bullish include Alok Agrawal’s Bloom Tree Partners, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group.
Consequently, specific money managers have jumped into CoreCivic Inc (NYSE:CXW) headfirst. Millennium Management assembled the largest position in CoreCivic Inc (NYSE:CXW), while Elliott Management’s position was also a new one. The following funds were also among the new CXW investors: Alok Agrawal’s Bloom Tree Partners, Kevin D. Eng’s Columbus Hill Capital Management, and Sahm Adrangi’s Kerrisdale Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CoreCivic Inc (NYSE:CXW) but similarly valued. These stocks are Brunswick Corporation (NYSE:BC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Olin Corporation (NYSE:OLN), and IDACORP Inc (NYSE:IDA). This group of stocks’ market valuations match CXW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BC | 30 | 500919 | -1 |
| CBRL | 22 | 127400 | 7 |
| OLN | 18 | 989434 | -10 |
| IDA | 6 | 96192 | -4 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $428 million. That figure was $187 million in CXW’s case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand IDACORP Inc (NYSE:IDA) is the least popular one with only 6 bullish hedge fund positions. CoreCivic Inc (NYSE:CXW) is not the most popular stock in this group but hedge fund interest is still above average and just jumped. Given that, it may be a good idea to long into CXW and try to uncover the bullish thesis that has driven several prominent investors into the stock.
Disclosure: None
