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Hedge Funds Getting Bullish On Compass Minerals International, Inc. (CMP)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Compass Minerals International, Inc. (NYSE:CMP)?

Compass Minerals International, Inc. (NYSE:CMP) has seen an increase in hedge fund interest recently. Our calculations also showed that CMP 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.

To the average investor there are dozens of gauges shareholders put to use to value stocks. A duo of the most innovative gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the S&P 500 by a very impressive amount (see the details here).

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Compass Minerals International, Inc. (NYSE:CMP).

Hedge fund activity in Compass Minerals International, Inc. (NYSE:CMP)

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in CMP over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Is CMP A Good Stock To Buy?

More specifically, 40 North Management was the largest shareholder of Compass Minerals International, Inc. (NYSE:CMP), with a stake worth $31.1 million reported as of the end of September. Trailing 40 North Management was Cove Street Capital, which amassed a stake valued at $30.5 million. GLG Partners, Citadel Investment Group, and Millennium Management 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 Cove Street Capital allocated the biggest weight to Compass Minerals International, Inc. (NYSE:CMP), around 6.26% of its 13F portfolio. 40 North Management is also relatively very bullish on the stock, setting aside 1.89 percent of its 13F equity portfolio to CMP.

As aggregate interest increased, key money managers were leading the bulls’ herd. PEAK6 Capital Management, managed by Matthew Hulsizer, initiated the largest position in Compass Minerals International, Inc. (NYSE:CMP). PEAK6 Capital Management had $0.9 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Hoon Kim’s Quantinno Capital, and Adam Usdan’s Trellus Management Company.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Compass Minerals International, Inc. (NYSE:CMP) but similarly valued. We will take a look at ICF International Inc (NASDAQ:ICFI), GCP Applied Technologies Inc. (NYSE:GCP), Safety Insurance Group, Inc. (NASDAQ:SAFT), and Extended Stay America Inc (NYSE:STAY). This group of stocks’ market valuations match CMP’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ICFI 10 26175 -1
GCP 12 328231 -8
SAFT 12 47637 -3
STAY 18 260865 -17
Average 13 165727 -7.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $82 million in CMP’s case. Extended Stay America Inc (NYSE:STAY) is the most popular stock in this table. On the other hand ICF International Inc (NASDAQ:ICFI) is the least popular one with only 10 bullish hedge fund positions. Compass Minerals International, Inc. (NYSE:CMP) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on CMP as the stock returned 26.6% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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