Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Cambridge Bancorp (NASDAQ:CATC) changed recently.
Cambridge Bancorp (NASDAQ:CATC) investors should be aware of a decrease in enthusiasm from smart money recently. Cambridge Bancorp (NASDAQ:CATC) was in 5 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that CATC isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s go over the new hedge fund action surrounding Cambridge Bancorp (NASDAQ:CATC).
What does smart money think about Cambridge Bancorp (NASDAQ:CATC)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CATC over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Bernard Horn’s Polaris Capital Management has the biggest position in Cambridge Bancorp (NASDAQ:CATC), worth close to $10.2 million, accounting for 0.5% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $1.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of John D. Gillespie’s Prospector Partners, Richard Chilton’s Chilton Investment Company and Mario Gabelli’s GAMCO Investors. In terms of the portfolio weights assigned to each position Polaris Capital Management allocated the biggest weight to Cambridge Bancorp (NASDAQ:CATC), around 0.5% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to CATC.
Judging by the fact that Cambridge Bancorp (NASDAQ:CATC) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that elected to cut their full holdings heading into Q4. Intriguingly, Ken Griffin’s Citadel Investment Group sold off the biggest stake of all the hedgies followed by Insider Monkey, comprising close to $0.3 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cambridge Bancorp (NASDAQ:CATC) but similarly valued. These stocks are RedHill Biopharma Ltd (NASDAQ:RDHL), PolyMet Mining Corp. (NYSE:PLM), Kimbell Royalty Partners (NYSE:KRP), Bicycle Therapeutics plc (NASDAQ:BCYC), dMY Technology Group, Inc. (NYSE:DMYT), Century Bancorp, Inc. (NASDAQ:CNBKA), and Teekay Tankers Ltd. (NYSE:TNK). All of these stocks’ market caps are similar to CATC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RDHL | 3 | 1617 | 1 |
| PLM | 3 | 1600 | -1 |
| KRP | 4 | 3816 | 1 |
| BCYC | 7 | 73961 | 1 |
| DMYT | 26 | 82516 | 4 |
| CNBKA | 4 | 14693 | 1 |
| TNK | 13 | 20186 | -4 |
| Average | 8.6 | 28341 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $14 million in CATC’s case. dMY Technology Group, Inc. (NYSE:DMYT) is the most popular stock in this table. On the other hand RedHill Biopharma Ltd (NASDAQ:RDHL) is the least popular one with only 3 bullish hedge fund positions. Cambridge Bancorp (NASDAQ:CATC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CATC is 24. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CATC as the stock returned 35.1% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
