You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
CST Brands Inc (NYSE:CST) investors should be aware of a decrease in hedge fund interest in recent months. CST was in 25 hedge funds’ portfolio at the end of the third quarter of 2015. There were 31 hedge funds in our database with CST holdings at the end of the previous quarter.
If you’d ask most shareholders, hedge funds are perceived as unimportant, old financial vehicles of the past. While there are more than 8000 funds in operation at the moment, Experts at hedge fund tracking site Insider Monkey choose to focus on the aristocrats of this group, approximately 700 funds. These investment expertspreside over the lion’s share of the hedge fund industry’s total asset base, and by shadowing their best stock picks, Insider Monkey has revealed various investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to go over the recent action surrounding CST Brands Inc (NYSE:CST).
Hedge fund activity in CST Brands Inc (NYSE:CST)
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of -19% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly.
When looking at the hedgies followed by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management had the most valuable position in CST Brands Inc (NYSE:CST), worth close to $197.6 million, amounting to 1.7% of its total 13F portfolio. On Iridian Asset Management’s heels is Alan Fournier of Pennant Capital Management, with a $116.8 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism contain Daniel Lewis’s Orange Capital, Mario Gabelli’s GAMCO Investors and Israel Englander’s Millennium Management.
Because CST Brands Inc (NYSE:CST) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few money managers that elected to cut their entire stakes last quarter. It’s worth mentioning that Louis Bacon’s Moore Global Investments sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $17.6 million in call options.. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its call options., about $8.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 6 funds last quarter.
Let’s also take a look at hedge fund activity in other stocks similar to CST Brands Inc (NYSE:CST). We will take a look at Dana Holding Corporation (NYSE:DAN), Pebblebrook Hotel Trust (NYSE:PEB), Janus Capital Group Inc (NYSE:JNS), and REGAL-BELOIT CORPORATION (NYSE:RBC). This group of stocks’ market values match CST’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
CST Brands Inc (NYSE:CST) witnessed a larger decline in the hedge fund sentiment, but it was also more popular among hedge funds than some other stocks. Keeping this in mind, CST seems to be an investment worth your attention but a more detailed analysis may be required before going long.