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Hedge Funds Sticking With Consolidated Water Co. Ltd. (CWCO)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Consolidated Water Co. Ltd. (NASDAQ:CWCO).

Hedge fund interest in Consolidated Water Co. Ltd. (NASDAQ:CWCO) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CWCO to other stocks including Cross Country Healthcare, Inc. (NASDAQ:CCRN), Magenta Therapeutics, Inc. (NASDAQ:MGTA), and CAI International Inc (NYSE:CAI) to get a better sense of its popularity.

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AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

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. Now we’re going to check out the recent hedge fund action encompassing Consolidated Water Co. Ltd. (NASDAQ:CWCO).

How have hedgies been trading Consolidated Water Co. Ltd. (NASDAQ:CWCO)?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CWCO over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Is CWCO A Good Stock To Buy?

More specifically, Renaissance Technologies was the largest shareholder of Consolidated Water Co. Ltd. (NASDAQ:CWCO), with a stake worth $10.2 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $2.1 million. AQR Capital Management, Winton Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Consolidated Water Co. Ltd. (NASDAQ:CWCO), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CWCO.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. 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 AQR Capital Management).

Let’s also examine hedge fund activity in other stocks similar to Consolidated Water Co. Ltd. (NASDAQ:CWCO). These stocks are Cross Country Healthcare, Inc. (NASDAQ:CCRN), Magenta Therapeutics, Inc. (NASDAQ:MGTA), CAI International Inc (NYSE:CAI), and Helix Energy Solutions Group Inc. (NYSE:HLX). All of these stocks’ market caps resemble CWCO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCRN 13 19751 1
MGTA 10 32359 1
CAI 8 63669 -3
HLX 10 6961 -10
Average 10.25 30685 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $15 million in CWCO’s case. Cross Country Healthcare, Inc. (NASDAQ:CCRN) is the most popular stock in this table. On the other hand CAI International Inc (NYSE:CAI) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Consolidated Water Co. Ltd. (NASDAQ:CWCO) is even less popular than CAI. Hedge funds dodged a bullet by taking a bearish stance towards CWCO. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately CWCO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CWCO investors were disappointed as the stock returned -9.6% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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