After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards CBTX, Inc. (NASDAQ:CBTX).
Hedge fund interest in CBTX, Inc. (NASDAQ:CBTX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Urstadt Biddle Properties Inc (NYSE:UBA), Extraction Oil & Gas, Inc. (NASDAQ:XOG), and NV5 Holdings Inc (NASDAQ:NVEE) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the recent hedge fund action regarding CBTX, Inc. (NASDAQ:CBTX).
How have hedgies been trading CBTX, Inc. (NASDAQ:CBTX)?
At Q4’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in CBTX over the last 14 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in CBTX, Inc. (NASDAQ:CBTX). Millennium Management has a $11.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Forest Hill Capital, managed by Mark Lee, which holds a $5.8 million position; 1.8% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish contain Anton Schutz’s Mendon Capital Advisors, D. E. Shaw’s D E Shaw and Paul Hondros’s AlphaOne Capital Partners.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Arrowstreet Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CBTX, Inc. (NASDAQ:CBTX) but similarly valued. These stocks are Urstadt Biddle Properties Inc (NYSE:UBA), Extraction Oil & Gas, Inc. (NASDAQ:XOG), NV5 Holdings Inc (NASDAQ:NVEE), and Irsa Inversiones y Rprsntcins SA (NYSE:IRS). All of these stocks’ market caps resemble CBTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UBA | 7 | 25975 | -1 |
| XOG | 22 | 121852 | 2 |
| NVEE | 13 | 34100 | 0 |
| IRS | 7 | 59154 | -3 |
| Average | 12.25 | 60270 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $25 million in CBTX’s case. Extraction Oil & Gas, Inc. (NASDAQ:XOG) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc (NYSE:UBA) is the least popular one with only 7 bullish hedge fund positions. CBTX, Inc. (NASDAQ:CBTX) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CBTX wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CBTX investors were disappointed as the stock returned 8.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.