Do Hedge Funds Love Capstone Turbine Corporation (CPST)?

At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Capstone Turbine Corporation (NASDAQ:CPST) makes for a good investment right now.

Is Capstone Turbine Corporation (NASDAQ:CPST) a buy here? The best stock pickers were turning bullish. The number of bullish hedge fund bets went up by 1 lately. Capstone Turbine Corporation (NASDAQ:CPST) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that CPST isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Algert of Algert Global

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. With all of this in mind we’re going to analyze the new hedge fund action regarding Capstone Turbine Corporation (NASDAQ:CPST).

How are hedge funds trading Capstone Turbine Corporation (NASDAQ:CPST)?

At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CPST over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CPST A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Renaissance Technologies,  holds the most valuable position in Capstone Turbine Corporation (NASDAQ:CPST). Renaissance Technologies has a $1.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Peter Algert of Algert Global, with a $0.2 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism comprise Thomas E. Claugus’s GMT Capital, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Algert Global allocated the biggest weight to Capstone Turbine Corporation (NASDAQ:CPST), around 0.05% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CPST.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Capstone Turbine Corporation (NASDAQ:CPST) headfirst. Algert Global, managed by Peter Algert, assembled the most outsized position in Capstone Turbine Corporation (NASDAQ:CPST). Algert Global had $0.2 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Capstone Turbine Corporation (NASDAQ:CPST). These stocks are Gulf Resources, Inc. (NASDAQ:GURE), PDS Biotechnology Corporation (NASDAQ:PDSB), Kentucky First Federal Bancorp (NASDAQ:KFFB), Organovo Holdings Inc (NYSE:ONVO), VistaGen Therapeutics, Inc. (NASDAQ:VTGN), Onconova Therapeutics, Inc. (NASDAQ:ONTX), and Aileron Therapeutics, Inc. (NASDAQ:ALRN). This group of stocks’ market caps are closest to CPST’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GURE 1 2008 0
PDSB 3 2807 1
KFFB 1 428 0
ONVO 2 3477 -1
VTGN 2 106 1
ONTX 2 88 -1
ALRN 4 1969 2
Average 2.1 1555 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $2 million in CPST’s case. Aileron Therapeutics, Inc. (NASDAQ:ALRN) is the most popular stock in this table. On the other hand Gulf Resources, Inc. (NASDAQ:GURE) is the least popular one with only 1 bullish hedge fund positions. Capstone Turbine Corporation (NASDAQ:CPST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPST is 69.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on CPST as the stock returned 63.9% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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