Did Hedge Funds Drop The Ball On CURO Group Holdings Corp. (CURO) ?

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

CURO Group Holdings Corp. (NYSE:CURO) has experienced a decrease in activity from the world’s largest hedge funds in recent months. CURO was in 13 hedge funds’ portfolios at the end of the second quarter of 2019. There were 17 hedge funds in our database with CURO holdings at the end of the previous quarter. Our calculations also showed that CURO isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are many methods shareholders use to size up publicly traded companies. A couple of the less known methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best money managers can trounce the broader indices by a superb amount (see the details here).

Thomas Brown Tom Brown

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s check out the recent hedge fund action encompassing CURO Group Holdings Corp. (NYSE:CURO).

How are hedge funds trading CURO Group Holdings Corp. (NYSE:CURO)?

At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the first quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in CURO a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

No of Hedge Funds with CURO Positions

More specifically, Empyrean Capital Partners was the largest shareholder of CURO Group Holdings Corp. (NYSE:CURO), with a stake worth $19.2 million reported as of the end of March. Trailing Empyrean Capital Partners was Nantahala Capital Management, which amassed a stake valued at $18 million. Second Curve Capital, Prescott Group Capital Management, and Glendon Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Judging by the fact that CURO Group Holdings Corp. (NYSE:CURO) has witnessed declining sentiment from the smart money, it’s easy to see that there is a sect of fund managers that slashed their positions entirely by the end of the second quarter. It’s worth mentioning that Usman Waheed’s Strycker View Capital cut the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $0.5 million in stock. Bradley Louis Radoff’s fund, Fondren Management, also sold off its stock, about $0.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CURO Group Holdings Corp. (NYSE:CURO) but similarly valued. These stocks are Star Group, L.P. (NYSE:SGU), Priority Technology Holdings, Inc. (NASDAQ:PRTH), Cowen Inc. (NASDAQ:COWN), and Primo Water Corporation (NASDAQ:PRMW). This group of stocks’ market values are closest to CURO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SGU 8 97903 0
PRTH 2 5077 0
COWN 19 76670 -2
PRMW 12 108629 -1
Average 10.25 72070 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $90 million in CURO’s case. Cowen Inc. (NASDAQ:COWN) is the most popular stock in this table. On the other hand Priority Technology Holdings, Inc. (NASDAQ:PRTH) is the least popular one with only 2 bullish hedge fund positions. CURO Group Holdings Corp. (NYSE:CURO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CURO as the stock returned 20.2% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.