Hedge Funds Are Crazy About Carmike Cinemas, Inc. (CKEC)

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 5.2% in the 12 months ending October 30, 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, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, with 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-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 Carmike Cinemas, Inc. (NASDAQ:CKEC).

Carmike Cinemas, Inc. was in 26 hedge funds’ portfolios at the end of September. CKEC investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 24 hedge funds in our database with CKEC holdings 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 Mag Silver Corp (USA) (NYSEMKT:MVG), Xunlei Ltd (NASDAQ:XNET), and Raptor Pharmaceutical Corp. (NASDAQ:RPTP) to gather more data points.

Keeping this in mind, we’re going to take a glance at the latest action regarding Carmike Cinemas, Inc. (NASDAQ:CKEC).

How have hedgies been trading Carmike Cinemas, Inc. (NASDAQ:CKEC)?

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Manatuck Hill Partners, managed by Mark Broach, holds the number one position in Carmike Cinemas, Inc. (NASDAQ:CKEC). Manatuck Hill Partners has a $18.9 million position in the stock, comprising 8.1% of its 13F portfolio. On Manatuck Hill Partners’s heels is Ken Griffin of Citadel Investment Group, with a $13.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of Ken Grossman and Glen Schneider’s SG Capital Management, Israel Englander’s Millennium Management and Julian Allen’s Spitfire Capital.

Consequently, specific money managers have been driving this bullishness. Serengeti Asset Management, managed by Jody LaNasa and Vivian Lau, initiated the biggest position in Carmike Cinemas, Inc. (NASDAQ:CKEC). Serengeti Asset Management had $2 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim O’Brien and Jonathan Dorfman’s Napier Park Global Capital, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s now review hedge fund activity in other stocks similar to Carmike Cinemas, Inc. (NASDAQ:CKEC). We will take a look at Mag Silver Corp (USA) (NYSEMKT:MVG), Xunlei Ltd (NASDAQ:XNET), Raptor Pharmaceutical Corp. (NASDAQ:RPTP), and Yodlee Inc (NASDAQ:YDLE). This group of stocks’ market valuations match CKEC’s market valuation.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $99 million in CKEC’s case. Raptor Pharmaceutical Corp. (NASDAQ:RPTP) is the most popular stock in this table. On the other hand Xunlei Ltd (NASDAQ:XNET) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Carmike Cinemas, Inc. (NASDAQ:CKEC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.