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Hedge Funds Are Selling Care.com Inc (CRCM)

We can judge whether Care.com Inc (NYSE:CRCM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

Care.com Inc (NYSE:CRCM) has experienced a decrease in hedge fund interest of late. Our calculations also showed that CRCM 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.

RENAISSANCE TECHNOLOGIES

We’re going to review the latest hedge fund action encompassing Care.com Inc (NYSE:CRCM).

What have hedge funds been doing with Care.com Inc (NYSE:CRCM)?

At the end of the third quarter, a total of 19 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 CRCM over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CRCM_dec2018

More specifically, Tenzing Global Investors was the largest shareholder of Care.com Inc (NYSE:CRCM), with a stake worth $54.2 million reported as of the end of September. Trailing Tenzing Global Investors was Portolan Capital Management, which amassed a stake valued at $39.9 million. Renaissance Technologies, AQR Capital Management, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.

Because Care.com Inc (NYSE:CRCM) has witnessed bearish sentiment from the smart money, logic holds that there was a specific group of fund managers that elected to cut their positions entirely heading into Q3. At the top of the heap, Warren Lammert’s Granite Point Capital said goodbye to the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $2 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund sold off about $1 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q3.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Care.com Inc (NYSE:CRCM) but similarly valued. These stocks are Flushing Financial Corporation (NASDAQ:FFIC), John Hancock Financial Opportunities Fund (NYSE:BTO), AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), and CBL & Associates Properties, Inc. (NYSE:CBL). This group of stocks’ market caps match CRCM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FFIC 8 49726 -2
BTO 2 1195 2
AMAG 18 254537 2
CBL 12 16495 1
Average 10 80488 0.75

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 $80 million. That figure was $185 million in CRCM’s case. AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) is the most popular stock in this table. On the other hand 0 is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Care.com Inc (NYSE:CRCM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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