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CST Brands Inc (CST): Smart Money Heading for the Exits

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Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like CST Brands Inc (NYSE:CST).

CST Brands Inc (NYSE:CST) has seen a decrease in activity from the world’s largest hedge funds lately. CST was in 24 hedge funds’ portfolios at the end of September. There were 31 hedge funds in our database with CST positions at the end of the previous quarter. At the end of this article we will also compare CST to other stocks including Teradata Corporation (NYSE:TDC), EPAM Systems Inc (NYSE:EPAM), and CAE, Inc. (USA) (NYSE:CAE) to get a better sense of its popularity.

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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 does the smart money think about CST Brands Inc (NYSE:CST)?

Heading into the fourth quarter of 2016, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a 23% fall from the previous quarter. That followed two quarters of positive sentiment, with ownership among hedgies still being higher than it was at the end of 2015. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
CST
Of the funds tracked by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in CST Brands Inc (NYSE:CST). GAMCO Investors has a $128.9 million position in the stock. Coming in second is Magnetar Capital, led by Alec Litowitz and Ross Laser, holding a $102 million position; 1.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish include Matthew Halbower’s Pentwater Capital Management, Paul Tudor Jones’ Tudor Investment Corp, and D E Shaw.

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