Hedge Funds Are Nibbling On Computer Task Group, Inc. (CTG)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Computer Task Group, Inc. (NASDAQ:CTG) based on that data.

Is Computer Task Group, Inc. (NASDAQ:CTG) a buy, sell, or hold? Hedge funds are getting more bullish. The number of long hedge fund bets improved by 1 in recent months. Our calculations also showed that CTG isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the new hedge fund action regarding Computer Task Group, Inc. (NASDAQ:CTG).

Hedge fund activity in Computer Task Group, Inc. (NASDAQ:CTG)

Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CTG over the last 18 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.

Is CTG A Good Stock To Buy?

Among these funds, Minerva Advisors held the most valuable stake in Computer Task Group, Inc. (NASDAQ:CTG), which was worth $4.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $4 million worth of shares. Ancora Advisors, Arrowstreet Capital, and Royce & Associates were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Computer Task Group, Inc. (NASDAQ:CTG), around 3.5% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to CTG.

Consequently, specific money managers were leading the bulls’ herd. Bailard Inc, managed by Thomas Bailard, assembled the most outsized position in Computer Task Group, Inc. (NASDAQ:CTG). Bailard Inc had $0 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Computer Task Group, Inc. (NASDAQ:CTG) but similarly valued. We will take a look at Jerash Holdings (US), Inc. (NASDAQ:JRSH), AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), J Alexander’s Holdings Inc (NYSE:JAX), and Lee Enterprises, Incorporated (NYSE:LEE). This group of stocks’ market caps resemble CTG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JRSH 3 837 0
AVEO 4 781 -2
JAX 9 9687 -1
LEE 13 10356 5
Average 7.25 5415 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $10 million in CTG’s case. Lee Enterprises, Incorporated (NYSE:LEE) is the most popular stock in this table. On the other hand Jerash Holdings (US), Inc. (NASDAQ:JRSH) is the least popular one with only 3 bullish hedge fund positions. Computer Task Group, Inc. (NASDAQ:CTG) 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. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately CTG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CTG investors were disappointed as the stock returned 11% during the second quarter 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.