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Did Hedge Funds Make The Right Call On Cable One Inc (CABO) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Cable One Inc (NYSE:CABO) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Is Cable One Inc (NYSE:CABO) a splendid investment right now? The smart money was taking a bullish view. The number of long hedge fund positions increased by 4 lately. Our calculations also showed that CABO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most market participants, hedge funds are viewed as slow, old investment tools of years past. While there are greater than 8000 funds with their doors open at present, Our experts hone in on the masters of this club, around 850 funds. These money managers administer the majority of all hedge funds’ total asset base, and by observing their inimitable investments, Insider Monkey has uncovered numerous investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

TUDOR INVESTMENT CORP

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we’re going to take a peek at the key hedge fund action regarding Cable One Inc (NYSE:CABO).

How have hedgies been trading Cable One Inc (NYSE:CABO)?

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in CABO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CABO A Good Stock To Buy?

The largest stake in Cable One Inc (NYSE:CABO) was held by Renaissance Technologies, which reported holding $513.1 million worth of stock at the end of September. It was followed by Wallace Capital Management with a $81.5 million position. Other investors bullish on the company included AQR Capital Management, Millennium Management, and AltraVue Capital. In terms of the portfolio weights assigned to each position Wallace Capital Management allocated the biggest weight to Cable One Inc (NYSE:CABO), around 15.64% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, designating 8.65 percent of its 13F equity portfolio to CABO.

As industrywide interest jumped, specific money managers were breaking ground themselves. Thames Capital Management, managed by Jay Genzer, established the most outsized position in Cable One Inc (NYSE:CABO). Thames Capital Management had $4 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also initiated a $2 million position during the quarter. The following funds were also among the new CABO investors: Peter Muller’s PDT Partners, Paul Tudor Jones’s Tudor Investment Corp, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cable One Inc (NYSE:CABO) but similarly valued. These stocks are Carnival Corporation (NYSE:CCL), Qorvo Inc (NASDAQ:QRVO), Varian Medical Systems, Inc. (NYSE:VAR), and Suzano S.A. (NYSE:SUZ). This group of stocks’ market valuations are closest to CABO’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCL 31 146189 -3
QRVO 39 1165693 -6
VAR 25 439921 -5
SUZ 3 27219 -1
Average 24.5 444756 -3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $445 million. That figure was $675 million in CABO’s case. Qorvo Inc (NASDAQ:QRVO) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 3 bullish hedge fund positions. Cable One Inc (NYSE:CABO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately CABO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CABO investors were disappointed as the stock returned 8.1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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