Is Cabot Microelectronics Corporation (CCMP) A Good Stock To Buy?

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Cabot Microelectronics Corporation (NASDAQ:CCMP) has experienced an increase in enthusiasm from smart money lately. There were 15 hedge funds in our database with CCMP positions at the end of the 2016 third quarter. At the end of this article we will also compare CCMP to other stocks including Consolidated Communications Holdings Inc (NASDAQ:CNSL), Builders FirstSource, Inc. (NASDAQ:BLDR), and TopBuild Corp (NYSE:BLD) to get a better sense of its popularity.

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Keeping this in mind, let’s take a peek at the fresh action surrounding Cabot Microelectronics Corporation (NASDAQ:CCMP).

How are hedge funds trading Cabot Microelectronics Corporation (NASDAQ:CCMP)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a boost of 67% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in CCMP over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Cabot Microelectronics Corporation (NASDAQ:CCMP), worth close to $49.7 million. Sitting at the No. 2 spot is Douglas Braunstein and James Wooleryá of Hudson Executive Capital, with a $31 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Hudson Executive Capital, Jim Simons’ Renaissance Technologies and Phill Gross and Robert Atchinson’s Adage Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, key money managers have jumped into Cabot Microelectronics Corporation (NASDAQ:CCMP) headfirst. Adage Capital Management assembled the largest position in Cabot Microelectronics Corporation (NASDAQ:CCMP). According to its latest 13F filing, the fund had $8.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.9 million position during the quarter. The following funds were also among the new CCMP investors: Christopher Zepf and Brian Thonn’s Kingdom Ridge Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Cabot Microelectronics Corporation (NASDAQ:CCMP) but similarly valued. These stocks are Consolidated Communications Holdings Inc (NASDAQ:CNSL), Builders FirstSource, Inc. (NASDAQ:BLDR), TopBuild Corp (NYSE:BLD), and Emergent Biosolutions Inc (NYSE:EBS). This group of stocks’ market values are closest to CCMP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CNSL 6 3368 0
BLDR 34 441474 1
BLD 21 182845 -5
EBS 14 135032 -3

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $159 million in CCMP’s case. Builders FirstSource, Inc. (NASDAQ:BLDR) is the most popular stock in this table. On the other hand Consolidated Communications Holdings Inc (NASDAQ:CNSL) is the least popular one with only 6 bullish hedge fund positions. Cabot Microelectronics Corporation (NASDAQ:CCMP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BLDR might be a better candidate to consider taking a long position in.

Disclosure: None