Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Cooper-Standard Holdings Inc (NYSE:CPS)? The smart money sentiment can provide an answer to this question.
Cooper-Standard Holdings Inc (NYSE:CPS) has seen an increase in support from the world’s most elite money managers of late. CPS was in 16 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with CPS holdings at the end of the previous quarter. Our calculations also showed that CPS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open at present, We look at the upper echelon of this club, around 750 funds. These money managers manage most of the smart money’s total capital, and by keeping track of their best equity investments, Insider Monkey has come up with many investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s analyze the latest hedge fund action encompassing Cooper-Standard Holdings Inc (NYSE:CPS).
What does smart money think about Cooper-Standard Holdings Inc (NYSE:CPS)?
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CPS over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Cooper-Standard Holdings Inc (NYSE:CPS), which was worth $5.9 million at the end of the third quarter. On the second spot was Levin Capital Strategies which amassed $5.7 million worth of shares. Two Sigma Advisors, AQR Capital Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Trellus Management Company allocated the biggest weight to Cooper-Standard Holdings Inc (NYSE:CPS), around 1.23% of its 13F portfolio. Levin Capital Strategies is also relatively very bullish on the stock, earmarking 0.62 percent of its 13F equity portfolio to CPS.
Now, key hedge funds were breaking ground themselves. Weld Capital Management, managed by Minhua Zhang, initiated the most valuable position in Cooper-Standard Holdings Inc (NYSE:CPS). Weld Capital Management had $0.9 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.3 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cooper-Standard Holdings Inc (NYSE:CPS) but similarly valued. We will take a look at Kimbell Royalty Partners (NYSE:KRP), AngioDynamics, Inc. (NASDAQ:ANGO), INMODE LTD. (NASDAQ:INMD), and Adecoagro SA (NYSE:AGRO). This group of stocks’ market caps are closest to CPS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRP | 5 | 15303 | 0 |
| ANGO | 15 | 34646 | 3 |
| INMD | 7 | 24136 | 7 |
| AGRO | 16 | 152604 | 4 |
| Average | 10.75 | 56672 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $34 million in CPS’s case. Adecoagro SA (NYSE:AGRO) is the most popular stock in this table. On the other hand Kimbell Royalty Partners (NYSE:KRP) is the least popular one with only 5 bullish hedge fund positions. Cooper-Standard Holdings Inc (NYSE:CPS) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CPS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CPS were disappointed as the stock returned -30.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
