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Hedge Funds Have Never Been This Bullish On Carbon Black, Inc. (CBLK)

Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Carbon Black, Inc. (NASDAQ:CBLK) shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. CBLK was in 19 hedge funds’ portfolios at the end of March. There were 17 hedge funds in our database with CBLK holdings at the end of the previous quarter. Our calculations also showed that cblk isn’t among the 30 most popular stocks among hedge funds.

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 market by 40 percentage points since May 2014 through May 30, 2019 (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.

David Brown Hawk Ridge Partners

Let’s take a look at the new hedge fund action regarding Carbon Black, Inc. (NASDAQ:CBLK).

How are hedge funds trading Carbon Black, Inc. (NASDAQ:CBLK)?

Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CBLK over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CBLK Positions

The largest stake in Carbon Black, Inc. (NASDAQ:CBLK) was held by Point72 Asset Management, which reported holding $14.3 million worth of stock at the end of March. It was followed by Hawk Ridge Management with a $9.8 million position. Other investors bullish on the company included Portolan Capital Management, Clearline Capital, and North Run Capital.

As industrywide interest jumped, key hedge funds have jumped into Carbon Black, Inc. (NASDAQ:CBLK) headfirst. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in Carbon Black, Inc. (NASDAQ:CBLK). Point72 Asset Management had $14.3 million invested in the company at the end of the quarter. Marc Majzner’s Clearline Capital also initiated a $7.2 million position during the quarter. The following funds were also among the new CBLK investors: Tor Minesuk’s Mondrian Capital, Joseph Samuels’s Islet Management, and Stanley Druckenmiller’s Duquesne Capital.

Let’s go over hedge fund activity in other stocks similar to Carbon Black, Inc. (NASDAQ:CBLK). These stocks are Epizyme Inc (NASDAQ:EPZM), KEMET Corporation (NYSE:KEM), Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA), and InflaRx N.V. (NASDAQ:IFRX). This group of stocks’ market valuations resemble CBLK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EPZM 19 353318 1
KEM 19 154439 -2
KNSA 10 107729 2
IFRX 15 411437 2
Average 15.75 256731 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $60 million in CBLK’s case. Epizyme Inc (NASDAQ:EPZM) is the most popular stock in this table. On the other hand Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) is the least popular one with only 10 bullish hedge fund positions. Carbon Black, Inc. (NASDAQ:CBLK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on CBLK as the stock returned 12.1% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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