It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Continental Building Products Inc (NYSE:CBPX).
Continental Building Products Inc (NYSE:CBPX) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 26 hedge funds’ portfolios at the end of September. At the end of this article we will also compare CBPX to other stocks including Hanmi Financial Corp (NASDAQ:HAFC), Gamco Investors Inc. (NYSE:GBL), and Crossamerica Partners LP (NYSE:CAPL) 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.
Hedge fund activity in Continental Building Products Inc (NYSE:CBPX)
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in CBPX 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.
According to Insider Monkey’s hedge fund database, D E Shaw, one of the biggest hedge funds in the world has the largest position in Continental Building Products Inc (NYSE:CBPX), worth close to $21.1 million. The second largest stake is held by Lodge Hill Capital, led by Clint Murray, which holds a $12.5 million position; 1.5% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism consist of Joel Greenblatt’s Gotham Asset Management, Tim David’s Guardian Point Capital and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Lodge Hill Capital is 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.
Judging by the fact that Continental Building Products Inc (NYSE:CBPX) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that slashed their positions entirely last quarter. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management cut the biggest position of all the investors tracked by Insider Monkey, worth an estimated $8.9 million in stock, and Ken Grossman and Glen Schneider’s SG Capital Management was right behind this move, as the fund said goodbye to about $5.2 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to Continental Building Products Inc (NYSE:CBPX). We will take a look at Hanmi Financial Corp (NASDAQ:HAFC), Gamco Investors Inc. (NYSE:GBL), Crossamerica Partners LP (NYSE:CAPL), and Cardinal Financial Corporation (NASDAQ:CFNL). All of these stocks’ market caps are closest to CBPX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $40 million. That figure was $127 million in CBPX’s case. Cardinal Financial Corporation (NASDAQ:CFNL) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Continental Building Products Inc (NYSE:CBPX) 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.