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Is Culp, Inc. (CFI) A Good Stock To Buy?

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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 Culp, Inc. (NYSE:CFI), and what that likely means for the prospects of the company and its stock.

Hedge fund interest in Culp, Inc. (NYSE:CFI) shares was flat at the end of last quarter, with 9 hedge funds bullish on the stock. At the end of this article we will also compare CFI to other stocks including Spok Holdings Inc (NASDAQ:SPOK), Cytokinetics, Inc. (NASDAQ:CYTK), and Dynex Capital Inc (NYSE:DX) 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.

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How have hedgies been trading Culp, Inc. (NYSE:CFI)?

Heading into the fourth quarter of 2016, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. By comparison, 13 hedge funds held shares or bullish call options in CFI heading into this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, has the number one position in Culp, Inc. (NYSE:CFI), worth close to $19.1 million. The second largest stake is held by Chuck Royce’s Royce & Associates holding a $4.1 million position. Other members of the smart money that hold long positions contain John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’ AQR Capital Management and D. E. Shaw’s D E Shaw. 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.

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