Here’s What Hedge Funds Think About Cray Inc. (CRAY)

Insider Monkey finished processing more than 700 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2018. In this article we are going to take a look at smart money sentiment towards Cray Inc. (NASDAQ:CRAY).

Cray Inc. (NASDAQ:CRAY) was in 14 hedge funds’ portfolios at the end of the fourth quarter of 2018. CRAY investors should pay attention to an increase in hedge fund sentiment recently. There were 13 hedge funds in our database with CRAY positions at the end of the previous quarter. Our calculations also showed that cray isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Prem Watsa, Fairfax Financial Holdings

We’re going to review the fresh hedge fund action regarding Cray Inc. (NASDAQ:CRAY).

Hedge fund activity in Cray Inc. (NASDAQ:CRAY)

At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in CRAY a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CRAY Positions

More specifically, Royce & Associates was the largest shareholder of Cray Inc. (NASDAQ:CRAY), with a stake worth $25.7 million reported as of the end of December. Trailing Royce & Associates was ACK Asset Management, which amassed a stake valued at $14.5 million. Millennium Management, D E Shaw, and Fairfax Financial Holdings were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Hawk Ridge Management, managed by David Brown, initiated the most valuable position in Cray Inc. (NASDAQ:CRAY). Hawk Ridge Management had $3.5 million invested in the company at the end of the quarter. Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital also made a $0.5 million investment in the stock during the quarter. The only other fund with a brand new CRAY position is Joel Greenblatt’s Gotham Asset Management.

Let’s now review hedge fund activity in other stocks similar to Cray Inc. (NASDAQ:CRAY). These stocks are CONSOL Energy Inc. (NYSE:CEIX), ScanSource, Inc. (NASDAQ:SCSC), ArcBest Corp (NASDAQ:ARCB), and Teekay LNG Partners L.P. (NYSE:TGP). This group of stocks’ market valuations resemble CRAY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CEIX 25 123293 6
SCSC 12 50297 4
ARCB 10 38491 -4
TGP 8 19784 3
Average 13.75 57966 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $62 million in CRAY’s case. CONSOL Energy Inc. (NYSE:CEIX) is the most popular stock in this table. On the other hand Teekay LNG Partners L.P. (NYSE:TGP) is the least popular one with only 8 bullish hedge fund positions. Cray Inc. (NASDAQ:CRAY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on CRAY as the stock returned 24.9% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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