We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Corelogic Inc (NYSE:CLGX) based on that data.
Corelogic Inc (NYSE:CLGX) has experienced a decrease in enthusiasm from smart money lately. Our calculations also showed that CLGX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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. 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 S&P 500 ETFs by 41 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 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.
Matthew Hulsizer of PEAK6 Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when 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 take a gander at the new hedge fund action surrounding Corelogic Inc (NYSE:CLGX).
What have hedge funds been doing with Corelogic Inc (NYSE:CLGX)?
Heading into the first quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CLGX over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Corelogic Inc (NYSE:CLGX). D E Shaw has a $124.2 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $65.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Renaissance Technologies, Seth Rosen’s Nitorum Capital and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Corelogic Inc (NYSE:CLGX), around 5.43% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, dishing out 2.06 percent of its 13F equity portfolio to CLGX.
Judging by the fact that Corelogic Inc (NYSE:CLGX) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds that elected to cut their full holdings by the end of the third quarter. Interestingly, Steve Cohen’s Point72 Asset Management said goodbye to the largest investment of all the hedgies followed by Insider Monkey, valued at close to $16.4 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also sold off its stock, about $1.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Corelogic Inc (NYSE:CLGX) but similarly valued. These stocks are BankUnited (NYSE:BKU), AVX Corporation (NYSE:AVX), TopBuild Corp (NYSE:BLD), and MFA Financial, Inc. (NYSE:MFA). All of these stocks’ market caps resemble CLGX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BKU | 25 | 356297 | 1 |
| AVX | 14 | 102611 | 1 |
| BLD | 29 | 177380 | 8 |
| MFA | 19 | 84511 | 0 |
| Average | 21.75 | 180200 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $383 million in CLGX’s case. TopBuild Corp (NYSE:BLD) is the most popular stock in this table. On the other hand AVX Corporation (NYSE:AVX) is the least popular one with only 14 bullish hedge fund positions. Corelogic Inc (NYSE:CLGX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately CLGX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLGX were disappointed as the stock returned -26.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
