Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds.
Cannae Holdings, Inc. (NYSE:CNNE) investors should be aware of a decrease in enthusiasm from smart money lately. CNNE was in 19 hedge funds’ portfolios at the end of June. There were 24 hedge funds in our database with CNNE positions at the end of the previous quarter. Our calculations also showed that CNNE isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are perceived as worthless, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the crème de la crème of this club, approximately 750 funds. These hedge fund managers control bulk of all hedge funds’ total capital, and by shadowing their best investments, Insider Monkey has found numerous investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the new hedge fund action surrounding Cannae Holdings, Inc. (NYSE:CNNE).
What have hedge funds been doing with Cannae Holdings, Inc. (NYSE:CNNE)?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CNNE over the last 16 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.
The largest stake in Cannae Holdings, Inc. (NYSE:CNNE) was held by Nitorum Capital, which reported holding $116.9 million worth of stock at the end of March. It was followed by Millennium Management with a $41.2 million position. Other investors bullish on the company included Lomas Capital Management, Ancora Advisors, and Governors Lane.
Due to the fact that Cannae Holdings, Inc. (NYSE:CNNE) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of funds who were dropping their positions entirely in the second quarter. Intriguingly, Leon Lowenstein’s Lionstone Capital Management cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, totaling about $3.8 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dropped its stock, about $3.5 million worth. These transactions are important to note, as total hedge fund interest dropped by 5 funds in the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cannae Holdings, Inc. (NYSE:CNNE) but similarly valued. We will take a look at Jack in the Box Inc. (NASDAQ:JACK), OSI Systems, Inc. (NASDAQ:OSIS), Verra Mobility Corporation (NASDAQ:VRRM), and Sanmina Corporation (NASDAQ:SANM). This group of stocks’ market valuations are closest to CNNE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JACK | 33 | 545628 | -3 |
| OSIS | 13 | 65185 | 3 |
| VRRM | 21 | 173954 | 7 |
| SANM | 18 | 193604 | 0 |
| Average | 21.25 | 244593 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $275 million in CNNE’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand OSI Systems, Inc. (NASDAQ:OSIS) is the least popular one with only 13 bullish hedge fund positions. Cannae Holdings, Inc. (NYSE:CNNE) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CNNE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CNNE investors were disappointed as the stock returned -5.2% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
