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CARBO Ceramics Inc. (CRR): Are Hedge Funds Right About This Stock?

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Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze CARBO Ceramics Inc. (NYSE:CRR) from the perspective of those successful funds.

CARBO Ceramics Inc. (NYSE:CRR) shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 13 hedge funds in our database with CRR positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Everyday Health Inc (NYSE:EVDY), Federated National Holding Co (NASDAQ:FNHC), and Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM) to gather more data points.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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With all of this in mind, we’re going to analyze the new action encompassing CARBO Ceramics Inc. (NYSE:CRR).

How have hedgies been trading CARBO Ceramics Inc. (NYSE:CRR)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, up 8% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in CRR at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
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When looking at the institutional investors followed by Insider Monkey, Millennium Management, one of the 10 largest hedge funds in the world, holds the biggest position in CARBO Ceramics Inc. (NYSE:CRR). According to regulatory filings, the fund has an $8.8 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Balyasny Asset Management, led by Dmitry Balyasny, holding a $7.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Till Bechtolsheimer’s Arosa Capital Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw. We should note that Arosa Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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