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Hedge Funds Are Buying CBL & Associates Properties, Inc. (CBL)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

CBL & Associates Properties, Inc. (NYSE:CBL) was in 12 hedge funds’ portfolios at the end of September. CBL has experienced an increase in support from the world’s most elite money managers recently. There were 11 hedge funds in our database with CBL positions at the end of the previous quarter. Our calculations also showed that CBL isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

There are 13 analysts analyzing CBL & Associates Properties, Inc (NYSE:CBL) stock. Among them, 0 of them gave BUY ratings, 0 of them rated the stock as OUTPERFORM, 5 recommended it as HOLD, 5 set the rating at UNDERPERFORM and 3 rated shares of the company at SELL. The average analyst rating for CBL & Associates Properties, Inc is 3.90.

What does the smart money think about CBL & Associates Properties, Inc. (NYSE:CBL)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in CBL heading into this year. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

CBL_dec2018

According to Insider Monkey’s hedge fund database, GLG Partners, managed by Noam Gottesman, holds the most valuable position in CBL & Associates Properties, Inc. (NYSE:CBL). GLG Partners has a $6.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second most bullish fund manager is ZWEIG DIMENNA PARTNERS, led by Joe DiMenna, holding a $3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, Dmitry Balyasny’s Balyasny Asset Management and Chuck Royce’s Royce & Associates.

Consequently, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in CBL & Associates Properties, Inc. (NYSE:CBL). Balyasny Asset Management had $2.5 million invested in the company at the end of the quarter. Carl Goldsmith and Scott Klein’s Beach Point Capital Management also made a $0.4 million investment in the stock during the quarter. The following funds were also among the new CBL investors: D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CBL & Associates Properties, Inc. (NYSE:CBL) but similarly valued. These stocks are Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX), NextPoint Residential Trust Inc (NYSE:NXRT), Vantage Energy Acquisition Corp. (NASDAQ:VEAC), and Frontier Communications Corporation (NASDAQ:FTR). All of these stocks’ market caps are similar to CBL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRNX 9 195315 9
NXRT 9 136103 -1
VEAC 19 317126 1
FTR 20 39226 -3
Average 14.25 171943 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $16 million in CBL’s case. Frontier Communications Corporation (NASDAQ:FTR) is the most popular stock in this table. On the other hand, 0 is the least popular one with only 9 bullish hedge fund positions. CBL & Associates Properties, Inc. (NYSE:CBL) 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. In this regard, FTR might be a better candidate to consider a long position.

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

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