Hedge Funds Have Never Been This Bullish On Citi Trends, Inc. (CTRN)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Citi Trends, Inc. (NASDAQ:CTRN).

Citi Trends, Inc. (NASDAQ:CTRN) investors should pay attention to an increase in support from the world’s most elite money managers recently. Citi Trends, Inc. (NASDAQ:CTRN) was in 25 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CTRN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s analyze the recent hedge fund action regarding Citi Trends, Inc. (NASDAQ:CTRN).

Do Hedge Funds Think CTRN Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CTRN over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Citi Trends, Inc. (NASDAQ:CTRN) was held by Cowbird Capital, which reported holding $40.9 million worth of stock at the end of June. It was followed by Millennium Management with a $38.9 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Manatuck Hill Partners. In terms of the portfolio weights assigned to each position Cowbird Capital allocated the biggest weight to Citi Trends, Inc. (NASDAQ:CTRN), around 13.88% of its 13F portfolio. Harbert Management is also relatively very bullish on the stock, dishing out 3.57 percent of its 13F equity portfolio to CTRN.

Now, key hedge funds have been driving this bullishness. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, established the most outsized position in Citi Trends, Inc. (NASDAQ:CTRN). Shellback Capital had $9.6 million invested in the company at the end of the quarter. Raymond J. Harbert’s Harbert Management also made a $6.4 million investment in the stock during the quarter. The other funds with brand new CTRN positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Peter Muller’s PDT Partners.

Let’s go over hedge fund activity in other stocks similar to Citi Trends, Inc. (NASDAQ:CTRN). These stocks are Clarus Corporation (NASDAQ:CLAR), Luokung Technology Corp (NASDAQ:LKCO), Taysha Gene Therapies, Inc. (NASDAQ:TSHA), Lindblad Expeditions Holdings Inc (NASDAQ:LIND), Armada Hoffler Properties Inc (NYSE:AHH), Stoneridge, Inc. (NYSE:SRI), and Sesen Bio, Inc. (NASDAQ:SESN). All of these stocks’ market caps are similar to CTRN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $186 million in CTRN’s case. Clarus Corporation (NASDAQ:CLAR) is the most popular stock in this table. On the other hand Luokung Technology Corp (NASDAQ:LKCO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Citi Trends, Inc. (NASDAQ:CTRN) is more popular among hedge funds. Our overall hedge fund sentiment score for CTRN is 86. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately CTRN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CTRN were disappointed as the stock returned -12.1% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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