How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Cameco Corporation (NYSE:CCJ) and determine whether hedge funds had an edge regarding this stock.
Cameco Corporation (NYSE:CCJ) investors should pay attention to an increase in enthusiasm from smart money lately. Cameco Corporation (NYSE:CCJ) was in 35 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 25 hedge funds in our database with CCJ positions at the end of the second quarter. Our calculations also showed that CCJ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a peek at the key hedge fund action encompassing Cameco Corporation (NYSE:CCJ).
David Iben of Kopernik Global Investors
Do Hedge Funds Think CCJ Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in CCJ 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.
The largest stake in Cameco Corporation (NYSE:CCJ) was held by Kopernik Global Investors, which reported holding $194.9 million worth of stock at the end of September. It was followed by MFN Partners with a $154.6 million position. Other investors bullish on the company included Citadel Investment Group, Adage Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to Cameco Corporation (NYSE:CCJ), around 21.87% of its 13F portfolio. Moerus Capital Management is also relatively very bullish on the stock, dishing out 11.65 percent of its 13F equity portfolio to CCJ.
Consequently, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the most valuable position in Cameco Corporation (NYSE:CCJ). Two Sigma Advisors had $34.3 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $23.5 million position during the quarter. The following funds were also among the new CCJ investors: Zach Schreiber’s Point State Capital, Zach Schreiber’s Point State Capital, and Carson Yost’s Yost Capital Management.
Let’s go over hedge fund activity in other stocks similar to Cameco Corporation (NYSE:CCJ). We will take a look at Vornado Realty Trust (NYSE:VNO), Flex Ltd. (NASDAQ:FLEX), Ovintiv Inc. (NYSE:OVV), The Gap Inc. (NYSE:GPS), CRISPR Therapeutics AG (NASDAQ:CRSP), Jabil Inc. (NYSE:JBL), and Vertiv Holdings Co (NYSE:VRT). This group of stocks’ market caps match CCJ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VNO | 25 | 194723 | -4 |
| FLEX | 35 | 1149382 | -8 |
| OVV | 44 | 684078 | 4 |
| GPS | 28 | 370571 | -15 |
| CRSP | 43 | 1215665 | 9 |
| JBL | 27 | 517374 | 1 |
| VRT | 36 | 811401 | 0 |
| Average | 34 | 706171 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $706 million. That figure was $756 million in CCJ’s case. Ovintiv Inc. (NYSE:OVV) is the most popular stock in this table. On the other hand Vornado Realty Trust (NYSE:VNO) is the least popular one with only 25 bullish hedge fund positions. Cameco Corporation (NYSE:CCJ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CCJ is 66.3. 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 positive signal but 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, CCJ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CCJ were disappointed as the stock returned -10.3% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Cameco Corp (NYSE:CCJ)
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Disclosure: None. This article was originally published at Insider Monkey.
