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

“October lived up to its scary reputation—the S&P 500 falling in the month by the largest amount in the last 40 years, the only worse Octobers being ’08 and the Crash of ’87. For perspective, there have been only 5 occasions in those 40 years when the S&P 500 declined by greater than 20% from peak to trough. Other than the ’87 Crash, all were during recessions. There were 17 other instances, over the same time frame, when the market fell by over 10% but less than 20%. Furthermore, this is the 18th correction of 5% or more since the current bull market started in March ’09. Corrections are the norm. They can be healthy as they often undo market complacency—overbought levels—potentially allowing the market to base and move even higher.” This is how Trapeze Asset Management summarized the recent market moves in its investor letter. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards one of the stocks hedge funds invest in.

Is Carbon Black, Inc. (NASDAQ:CBLK) the right investment to pursue these days? The best stock pickers are in a bullish mood. The number of long hedge fund positions went up by 8 in recent months. Our calculations also showed that CBLK isn’t among the 30 most popular stocks among hedge funds. CBLK was in 17 hedge funds’ portfolios at the end of December. There were 9 hedge funds in our database with CBLK positions at the end of the previous quarter.

In the 21st century investor’s toolkit there are a large number of methods stock market investors have at their disposal to assess stocks. Some of the less utilized methods are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outperform their index-focused peers by a healthy amount (see the details here).

Paul Marshall Marshall Wace

Let’s review the key hedge fund action encompassing Carbon Black, Inc. (NASDAQ:CBLK).

Hedge fund activity in Carbon Black, Inc. (NASDAQ:CBLK)

At Q4’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 89% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in CBLK a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).


According to Insider Monkey’s hedge fund database, North Peak Capital, managed by Michael Kahan and Jeremy Kahan, holds the most valuable position in Carbon Black, Inc. (NASDAQ:CBLK). North Peak Capital has a $10.1 million position in the stock, comprising 8.5% of its 13F portfolio. On North Peak Capital’s heels is Anand Parekh of Alyeska Investment Group, with a $8.8 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism encompass Paul Marshall and Ian Wace’s Marshall Wace LLP, Thomas Ellis and Todd Hammer’s North Run Capital and George McCabe’s Portolan Capital Management.

Consequently, key hedge funds have been driving this bullishness. North Peak Capital, managed by Michael Kahan and Jeremy Kahan, assembled the biggest position in Carbon Black, Inc. (NASDAQ:CBLK). North Peak Capital had $10.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $7.7 million position during the quarter. The other funds with new positions in the stock are Thomas Ellis and Todd Hammer’s North Run Capital, George McCabe’s Portolan Capital Management, and David Brown’s Hawk Ridge Management.

Let’s now review hedge fund activity in other stocks similar to Carbon Black, Inc. (NASDAQ:CBLK). These stocks are Audentes Therapeutics, Inc. (NASDAQ:BOLD), Intrexon Corp (NASDAQ:XON), C&J Energy Services, Inc (NYSE:CJ), and NCI Building Systems, Inc. (NYSE:NCS). This group of stocks’ market values resemble CBLK’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BOLD 24 349589 7
XON 10 29347 1
CJ 25 254818 0
NCS 20 74692 -8
Average 19.75 177112 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $177 million. That figure was $47 million in CBLK’s case. C&J Energy Services, Inc (NYSE:CJ) is the most popular stock in this table. On the other hand Intrexon Corp (NASDAQ:XON) is the least popular one with only 10 bullish hedge fund positions. Carbon Black, Inc. (NASDAQ:CBLK) 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 CBLK wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); CBLK investors were disappointed as the stock returned -3.6% 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.