A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on CarGurus, Inc. (NASDAQ:CARG).
CarGurus, Inc. (NASDAQ:CARG) has seen a decrease in hedge fund interest of late. CarGurus, Inc. (NASDAQ:CARG) was in 29 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. There were 33 hedge funds in our database with CARG positions at the end of the fourth quarter. Our calculations also showed that CARG isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s review the key hedge fund action regarding CarGurus, Inc. (NASDAQ:CARG).
Do Hedge Funds Think CARG Is A Good Stock To Buy Now?
At the end of March, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CARG over the last 23 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy 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, Gavin Baker’s Atreides Management has the largest position in CarGurus, Inc. (NASDAQ:CARG), worth close to $63.6 million, accounting for 1.4% of its total 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $38.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Matt Sirovich and Jeremy Mindich’s Scopia Capital, Renaissance Technologies and Joseph Samuels’s Islet Management. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to CarGurus, Inc. (NASDAQ:CARG), around 3.8% of its 13F portfolio. Hill City Capital is also relatively very bullish on the stock, earmarking 3.23 percent of its 13F equity portfolio to CARG.
Judging by the fact that CarGurus, Inc. (NASDAQ:CARG) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedgies who were dropping their entire stakes by the end of the first quarter. It’s worth mentioning that Ricky Sandler’s Eminence Capital dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $71.7 million in stock, and Kevin Mok’s Hidden Lake Asset Management was right behind this move, as the fund said goodbye to about $17 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as CarGurus, Inc. (NASDAQ:CARG) but similarly valued. We will take a look at Brady Corp (NYSE:BRC), Greif, Inc. (NYSE:GEF), Independent Bank Corp (NASDAQ:INDB), Axos Financial, Inc. (NYSE:AX), Fulton Financial Corp (NASDAQ:FULT), INMODE LTD. (NASDAQ:INMD), and Owens & Minor, Inc. (NYSE:OMI). This group of stocks’ market values are closest to CARG’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $267 million in CARG’s case. INMODE LTD. (NASDAQ:INMD) is the most popular stock in this table. On the other hand Fulton Financial Corp (NASDAQ:FULT) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks CarGurus, Inc. (NASDAQ:CARG) is more popular among hedge funds. Our overall hedge fund sentiment score for CARG is 77.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately CARG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CARG were disappointed as the stock returned 6.8% since the end of the first quarter (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.