Hedge Funds Are Crazy About Citi Trends, Inc. (CTRN)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Citi Trends, Inc. (NASDAQ:CTRN) to find out whether there were any major changes in hedge funds’ views.

Citi Trends, Inc. (NASDAQ:CTRN) has seen an increase in activity from the world’s largest hedge funds of late. Citi Trends, Inc. (NASDAQ:CTRN) was in 26 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 25 hedge funds in our database with CTRN holdings at the end of June. Our calculations also showed that CTRN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a look at the new hedge fund action surrounding Citi Trends, Inc. (NASDAQ:CTRN).

Do Hedge Funds Think CTRN Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CTRN over the last 25 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.

Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the largest position in Citi Trends, Inc. (NASDAQ:CTRN), worth close to $32 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Scott Coulter of Cowbird Capital, with a $29.9 million position; 10.3% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Elise Di Vincenzo Crumbine’s Stormborn Capital Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to Citi Trends, Inc. (NASDAQ:CTRN), around 10.28% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, earmarking 3.05 percent of its 13F equity portfolio to CTRN.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Stormborn Capital Management, managed by Elise Di Vincenzo Crumbine, created the biggest position in Citi Trends, Inc. (NASDAQ:CTRN). Stormborn Capital Management had $9.3 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also made a $5.5 million investment in the stock during the quarter. The other funds with brand new CTRN positions are Israel Englander’s Millennium Management, Brian J. Higgins’s King Street Capital, and Lee Ainslie’s Maverick Capital.

Let’s go over hedge fund activity in other stocks similar to Citi Trends, Inc. (NASDAQ:CTRN). These stocks are Ambac Financial Group, Inc. (NYSE:AMBC), Aligos Therapeutics, Inc. (NASDAQ:ALGS), Valhi, Inc. (NYSE:VHI), FTC Solar Inc. (NASDAQ:FTCI), Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), and AxoGen, Inc. (NASDAQ:AXGN). This group of stocks’ market values are closest to CTRN’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $138 million in CTRN’s case. Ambac Financial Group, Inc. (NYSE:AMBC) is the most popular stock in this table. On the other hand Valhi, Inc. (NYSE:VHI) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Citi Trends, Inc. (NASDAQ:CTRN) is more popular among hedge funds. Our overall hedge fund sentiment score for CTRN is 86. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 31.1% in 2021 through December 9th but still managed to beat the market by 5.1 percentage points. Hedge funds were also right about betting on CTRN as the stock returned 12.7% since the end of September (through 12/9) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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