We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Cable One Inc (NYSE:CABO) and determine whether hedge funds skillfully traded this stock.
Is Cable One Inc (NYSE:CABO) worth your attention right now? Hedge funds were turning relatively bullish. The number of bullish hedge fund bets advanced by 1 in recent months. Cable One Inc (NYSE:CABO) was in 24 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 27. Our calculations also showed that CABO isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
If you’d ask most traders, hedge funds are seen as slow, old financial vehicles of the past. While there are greater than 8000 funds trading at present, Our experts choose to focus on the crème de la crème of this club, about 850 funds. It is estimated that this group of investors control bulk of all hedge funds’ total capital, and by keeping an eye on their unrivaled investments, Insider Monkey has identified several investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Cable One Inc (NYSE:CABO).
How have hedgies been trading Cable One Inc (NYSE:CABO)?
At the end of June, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CABO over the last 20 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Cable One Inc (NYSE:CABO), worth close to $542.9 million, comprising 0.5% of its total 13F portfolio. Coming in second is Wallace Capital Management, led by Scott Wallace, holding a $72.4 million position; 13.2% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions comprise Cliff Asness’s AQR Capital Management, Tom Gayner’s Markel Gayner Asset Management and Touk Sinantha’s 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 13.22% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, earmarking 6.37 percent of its 13F equity portfolio to CABO.
As one would reasonably expect, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the biggest position in Cable One Inc (NYSE:CABO). Balyasny Asset Management had $6.2 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $5 million investment in the stock during the quarter. The following funds were also among the new CABO investors: Louis Navellier’s Navellier & Associates, Greg Eisner’s Engineers Gate Manager, and Jinghua Yan’s TwinBeech Capital.
Let’s now take a look at 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 Regions Financial Corporation (NYSE:RF), Credicorp Ltd. (NYSE:BAP), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), Monolithic Power Systems, Inc. (NASDAQ:MPWR), argenx SE (NASDAQ:ARGX), Molina Healthcare, Inc. (NYSE:MOH), and Royal Caribbean Group (NYSE:RCL). This group of stocks’ market caps are similar to CABO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $603 million. That figure was $685 million in CABO’s case. Monolithic Power Systems, Inc. (NASDAQ:MPWR) is the most popular stock in this table. On the other hand Credicorp Ltd. (NYSE:BAP) is the least popular one with only 20 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. Our overall hedge fund sentiment score for CABO is 45.2. 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. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 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 -0.9% since Q2 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.