At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
CVR Energy, Inc. (NYSE:CVI) investors should be aware of an increase in enthusiasm from smart money of late. Our calculations also showed that cvi isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action surrounding CVR Energy, Inc. (NYSE:CVI).
What have hedge funds been doing with CVR Energy, Inc. (NYSE:CVI)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CVI over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Icahn Capital LP held the most valuable stake in CVR Energy, Inc. (NYSE:CVI), which was worth $2863.6 million at the end of the third quarter. On the second spot was Millennium Management which amassed $97.6 million worth of shares. Moreover, Renaissance Technologies, Citadel Investment Group, and Marshall Wace LLP were also bullish on CVR Energy, Inc. (NYSE:CVI), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in CVR Energy, Inc. (NYSE:CVI). Marshall Wace LLP had $12 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new CVI investors: Charles Lemonides’s Valueworks LLC, Brandon Haley’s Holocene Advisors, and Mike Vranos’s Ellington.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CVR Energy, Inc. (NYSE:CVI) but similarly valued. We will take a look at Performance Food Group Company (NYSE:PFGC), John Wiley & Sons Inc (NYSE:JW), Alteryx, Inc. (NYSE:AYX), and RLI Corp. (NYSE:RLI). This group of stocks’ market valuations match CVI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFGC | 23 | 225495 | 5 |
| JW | 15 | 138842 | -7 |
| AYX | 26 | 681553 | 8 |
| RLI | 11 | 163038 | 1 |
| Average | 18.75 | 302232 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $302 million. That figure was $3.06 billion in CVI’s case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 11 bullish hedge fund positions. CVR Energy, Inc. (NYSE:CVI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AYX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
