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Do Hedge Funds Love Cable One Inc (CABO)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Cable One Inc (NYSE:CABO)?

Cable One Inc (NYSE:CABO) has experienced an increase in hedge fund interest recently. CABO was in 23 hedge funds’ portfolios at the end of March. There were 19 hedge funds in our database with CABO positions at the end of the previous quarter. 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Lee Ainslie MAVERICK CAPITAL

Lee Ainslie of Maverick Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s analyze the key hedge fund action surrounding Cable One Inc (NYSE:CABO).

What does smart money think about 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. By comparison, 18 hedge funds held shares or bullish call options in CABO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

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, earmarking 8.65 percent of its 13F equity portfolio to CABO.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Thames Capital Management, managed by Jay Genzer, initiated the most valuable 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 made a $2 million investment in the stock 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 go over hedge fund activity in other stocks – not necessarily in the same industry as Cable One Inc (NYSE:CABO) but similarly valued. We will take a look at Carnival Corporation & Plc (NYSE:CCL), Qorvo Inc (NASDAQ:QRVO), Varian Medical Systems, Inc. (NYSE:VAR), and Suzano S.A. (NYSE:SUZ). All of these stocks’ market caps are closest to CABO’s market cap.

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 13.9% in 2020 through June 10th and surpassed the market by 14.2 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 9.8% 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.