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Did Hedge Funds Make The Right Call On Core-Mark Holding Company, Inc. (CORE) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtCore-Mark Holding Company, Inc. (NASDAQ:CORE) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Core-Mark Holding Company, Inc. (NASDAQ:CORE) was in 19 hedge funds’ portfolios at the end of the first quarter of 2020. CORE shareholders have witnessed an increase in hedge fund interest in recent months. There were 16 hedge funds in our database with CORE positions at the end of the previous quarter. Our calculations also showed that CORE 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 today’s marketplace there are tons of methods stock market investors have at their disposal to grade publicly traded companies. A pair of the most under-the-radar methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best investment managers can outpace the broader indices by a healthy amount (see the details here).

AlphaOne Capital Partners' Returns, AUM and Holdings

Paul Hondros of AlphaOne Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to go over the recent hedge fund action regarding Core-Mark Holding Company, Inc. (NASDAQ:CORE).

What have hedge funds been doing with Core-Mark Holding Company, Inc. (NASDAQ:CORE)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in CORE a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of Core-Mark Holding Company, Inc. (NASDAQ:CORE), with a stake worth $7.4 million reported as of the end of September. Trailing D E Shaw was Renaissance Technologies, which amassed a stake valued at $2.5 million. Millennium Management, Citadel Investment Group, and Marshall Wace LLP 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 Algert Coldiron Investors allocated the biggest weight to Core-Mark Holding Company, Inc. (NASDAQ:CORE), around 0.52% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.51 percent of its 13F equity portfolio to CORE.

As one would reasonably expect, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Core-Mark Holding Company, Inc. (NASDAQ:CORE). Marshall Wace LLP had $1.4 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new CORE investors: Hoon Kim’s Quantinno Capital, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Paul Hondros’s AlphaOne Capital Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Core-Mark Holding Company, Inc. (NASDAQ:CORE) but similarly valued. We will take a look at Innovative Industrial Properties, Inc. (NYSE:IIPR), Revolution Medicines, Inc. (NASDAQ:RVMD), Lions Gate Entertainment Corporation (NYSE:LGF-A), and Equitrans Midstream Corporation (NYSE:ETRN). This group of stocks’ market values match CORE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IIPR 14 99011 -2
RVMD 20 223473 20
LGF-A 23 207237 4
ETRN 19 227760 4
Average 19 189370 6.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $24 million in CORE’s case. Lions Gate Entertainment Corporation (NYSE:LGF-A) is the most popular stock in this table. On the other hand Innovative Industrial Properties, Inc. (NYSE:IIPR) is the least popular one with only 14 bullish hedge fund positions. Core-Mark Holding Company, Inc. (NASDAQ:CORE) 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 18.6% in 2020 through July 27th and surpassed the market by 17.1 percentage points. Unfortunately CORE wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CORE investors were disappointed as the stock returned -10.3% since Q1 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.