At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
The stock of the small-cap real estate company Consolidated-Tomoka Land Co. (NYSEMKT:CTO) lost 14% in the third quarter and hedge fund interest in shares was flat at the end of September. This is usually a negative indicator. 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 BioSpecifics Technologies Corp. (NASDAQ:BSTC), Vocera Communications Inc (NYSE:VCRA), and Brookfield Total Return Fund Inc (NYSE:HTR) to gather more data points.
Follow Cto Realty Growth Inc. (NYSE:CTO)
Follow Cto Realty Growth Inc. (NYSE:CTO)
In the financial world, there are several formulas investors use to assess publicly traded companies. A duo of the less known formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outpace the S&P 500 by a healthy amount (see the details here).
Now, we’re going to take a glance at the recent action encompassing Consolidated-Tomoka Land Co. (NYSEMKT:CTO).
What have hedge funds been doing with Consolidated-Tomoka Land Co. (NYSEMKT:CTO)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock. Among these funds, Wintergreen Advisers, managed by David Winters, holds the most valuable position in Consolidated-Tomoka Land Co. (NYSEMKT:CTO). Wintergreen Advisers has a $76.8 million position in the stock, comprising 15.8% of its 13F portfolio. Coming in second is Michael Reeber of Andalusian Capital Partners, with a $8.2 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Other peers that are bullish comprise Clint Carlson’s Carlson Capital, Andrew Grossman and Michael Levitt’s LG Capital Management, and Amy Minella’s Cardinal Capital.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now take a look at hedge fund activity in other stocks similar to Consolidated-Tomoka Land Co. (NYSEMKT:CTO). We will take a look at BioSpecifics Technologies Corp. (NASDAQ:BSTC), Vocera Communications Inc (NYSE:VCRA), Brookfield Total Return Fund Inc (NYSE:HTR), and Liberty Tax Inc (NASDAQ:TAX). All of these stocks’ market caps are closest to CTO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSTC | 6 | 15049 | -1 |
| VCRA | 14 | 25208 | 0 |
| HTR | 4 | 3938 | 2 |
| TAX | 6 | 49656 | 0 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $99 million in CTO’s case. Vocera Communications Inc (NYSE:VCRA) is the most popular stock in this table. On the other hand Brookfield Total Return Fund Inc (NYSE:HTR) is the least popular one with only 4 bullish hedge fund positions. Consolidated-Tomoka Land Co. (NYSEMKT:CTO) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VCRA might be a better candidate to consider a long position.
