Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of CalAtlantic Group Inc (NYSE:CAA).
Is CalAtlantic Group Inc (NYSE:CAA) a buy here? Money managers are taking a pessimistic view. The number of bullish hedge fund positions dropped by 4 recently. CalAtlantic Group Inc (NYSE:CAA) was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 14 hedge funds in our database with CalAtlantic Group Inc (NYSE:CAA) positions at the end of the previous quarter. At the end of this article, we will also compare CalAtlantic Group Inc (NYSE:CAA) to other stocks including Colony Capital Inc (NYSE:CLNY), Rice Energy Inc (NYSE:RICE), and Integra Lifesciences Holdings Corp (NASDAQ:IART) to get a better sense of its popularity.
Today, there are plenty of methods investors can use to appraise publicly traded companies. Some of the most underrated methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the broader indices by a healthy margin (see the details here).
Now, we’re going to review the key action surrounding CalAtlantic Group Inc (NYSE:CAA).
How have hedgies been trading CalAtlantic Group Inc (NYSE:CAA)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 29% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the number one position in CalAtlantic Group Inc (NYSE:CAA), worth close to $115.6 million, corresponding to 0.1% of its total 13F portfolio. On Citadel Investment Group’s heels is Amici Capital, managed by Paul Orlin and Alex Porter, which holds a $31.5 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain Chuck Royce’s Royce & Associates, Christopher A. Winham’s Tide Point Capital, and Charles Clough’s Clough Capital Partners.
Seeing as CalAtlantic Group Inc (NYSE:CAA) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Robert Emil Zoellner’s Alpine Associates sold off the largest stake of all the hedgies followed by Insider Monkey, totaling about $9.7 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also dropped its stock, about $6.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CalAtlantic Group Inc (NYSE:CAA) but similarly valued. We will take a look at Colony Capital Inc (NYSE:CLNY), Rice Energy Inc (NYSE:RICE), Integra Lifesciences Holdings Corp (NASDAQ:IART), and AVX Corporation (NYSE:AVX). This group of stocks’ market valuations is similar to CalAtlantic Group Inc (NYSE:CAA)’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $188 million in CalAtlantic Group Inc (NYSE:CAA)’s case. Colony Financial Inc (NYSE:CLNY) is the most popular stock in this table. On the other hand, AVX Corporation (NYSE:AVX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks, CalAtlantic Group Inc (NYSE:CAA) is even less popular than AVX Corporation (NYSE:AVX). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.