Do Hedge Funds Love Calgon Carbon Corporation (CCC)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Calgon Carbon Corporation (NYSE:CCC).

Calgon Carbon Corporation (NYSE:CCC) has experienced a decrease in enthusiasm from smart money recently. CCC was in 12 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with CCC holdings at the end of the previous quarter. At the end of this article we will also compare CCC to other stocks including MTS Systems Corporation (NASDAQ:MTSC), FormFactor, Inc. (NASDAQ:FORM), and Tailored Brands Inc (NYSE:TLRD) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with Calgon Carbon Corporation (NYSE:CCC)?

Heading into the fourth quarter of 2016, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 20% from the second quarter of 2016. On the other hand, there were a total of 5 hedge funds with a bullish position in CCC at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Calgon Carbon Corporation (NYSE:CCC), worth close to $11.5 million. The second most bullish fund manager is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $7.1 million position. Other peers that are bullish consist of Ken Griffin’s Citadel Investment Group, Cliff Asness’ AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cashed in the largest investment of the 700 funds watched by Insider Monkey, comprising close to $2 million in stock, and Paul Tudor Jones’ Tudor Investment Corp was right behind this move, as the fund dumped about $0.4 million worth of shares.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Calgon Carbon Corporation (NYSE:CCC) but similarly valued. We will take a look at MTS Systems Corporation (NASDAQ:MTSC), FormFactor, Inc. (NASDAQ:FORM), Tailored Brands Inc (NYSE:TLRD), and Raptor Pharmaceutical Corp. (NASDAQ:RPTP). All of these stocks’ market caps are similar to CCC’s market cap.

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 $150 million. That figure was $26 million in CCC’s case. Tailored Brands Inc (NYSE:TLRD) is the most popular stock in this table. On the other hand FormFactor, Inc. (NASDAQ:FORM) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Calgon Carbon Corporation (NYSE:CCC) is even less popular than FORM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None