Is Care.com Inc (CRCM) A Good Stock for Your Portfolio?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Care.com Inc (NYSE:CRCM), and what that likely means for the prospects of the company and its stock.

Care.com Inc (NYSE:CRCM) was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. CRCM investors should pay attention to an increase in enthusiasm from smart money recently. There were 12 hedge funds in our database with CRCM positions at the end of the previous quarter. At the end of this article we will also compare CRCM to other stocks including America’s Car-Mart, Inc. (NASDAQ:CRMT), NVE Corporation (NASDAQ:NVEC), and Foamix Pharmaceuticals Ltd (NASDAQ:FOMX) to get a better sense of its popularity.

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.

Olesya Feketa/Shutterstock.com

What have hedge funds been doing with Care.com Inc (NYSE:CRCM)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 8% uptick from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CRCM over the last 5 quarters, which remained flat in the first-half of this year. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in Care.com Inc (NYSE:CRCM), worth close to $15.2 million. The second most bullish fund manager is Portolan Capital Management, led by George McCabe, holding an $11.5 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Renaissance Technologies, one of the largest hedge funds in the world, Bryant Regan’s Lafitte Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are 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.