Hedge Funds Never Been Less Bullish On Capital Senior Living Corporation (CSU)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Capital Senior Living Corporation (NYSE:CSU) based on those filings.

Capital Senior Living Corporation (NYSE:CSU) was in 6 hedge funds’ portfolios at the end of March. CSU investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 9 hedge funds in our database with CSU holdings at the end of the previous quarter. Our calculations also showed that CSU 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the key hedge fund action surrounding Capital Senior Living Corporation (NYSE:CSU).

What does smart money think about Capital Senior Living Corporation (NYSE:CSU)?

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CSU over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Arbiter Partners Capital Management, managed by Paul J. Isaac, holds the largest position in Capital Senior Living Corporation (NYSE:CSU). Arbiter Partners Capital Management has a $2.6 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Cove Street Capital, managed by Jeffrey Bronchick, which holds a $2.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism encompass Renaissance Technologies, Christopher Shackelton and Adam Gray’s Coliseum Capital and John A. Levin’s Levin Capital Strategies. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to Capital Senior Living Corporation (NYSE:CSU), around 0.44% of its 13F portfolio. Arbiter Partners Capital Management is also relatively very bullish on the stock, setting aside 0.39 percent of its 13F equity portfolio to CSU.

Due to the fact that Capital Senior Living Corporation (NYSE:CSU) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that slashed their entire stakes by the end of the first quarter. At the top of the heap, Phil Frohlich’s Prescott Group Capital Management sold off the largest position of all the hedgies tracked by Insider Monkey, totaling close to $0.1 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Capital Senior Living Corporation (NYSE:CSU). We will take a look at Ion Geophysical Corp (NYSE:IO), Rosehill Resources Inc. (NASDAQ:ROSE), BBQ Holdings, Inc. (NASDAQ:BBQ), and KLX Energy Services Holdings, Inc. (NASDAQ:KLXE). All of these stocks’ market caps are closest to CSU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IO 5 1971 -5
ROSE 4 325 1
BBQ 4 7092 1
KLXE 14 2577 -5
Average 6.75 2991 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $6 million in CSU’s case. KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) is the most popular stock in this table. On the other hand Rosehill Resources Inc. (NASDAQ:ROSE) is the least popular one with only 4 bullish hedge fund positions. Capital Senior Living Corporation (NYSE:CSU) is not the least popular stock in this group but hedge fund interest is still below 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on CSU as the stock returned 82.8% during the second quarter and outperformed the market by an even larger margin.

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