Is CAI A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about CAI International Inc (NYSE:CAI)?

Is CAI a good stock to buy now? CAI International Inc (NYSE:CAI) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. CAI investors should pay attention to an increase in hedge fund sentiment lately. There were 9 hedge funds in our database with CAI positions at the end of the second quarter. Our calculations also showed that CAI 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Nathaniel August - Mangrove Partners

Nathaniel August of Mangrove Partners

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. Keeping this in mind let’s take a glance at the recent hedge fund action surrounding CAI International Inc (NYSE:CAI).

Do Hedge Funds Think CAI Is A Good Stock To Buy Now?

At the end of September, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CAI over the last 21 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Is CAI A Good Stock To Buy?

Among these funds, Park West Asset Management held the most valuable stake in CAI International Inc (NYSE:CAI), which was worth $40.8 million at the end of the third quarter. On the second spot was Weiss Asset Management which amassed $34.9 million worth of shares. Mangrove Partners, No Street Capital, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to CAI International Inc (NYSE:CAI), around 2.94% of its 13F portfolio. Park West Asset Management is also relatively very bullish on the stock, setting aside 1.58 percent of its 13F equity portfolio to CAI.

As industrywide interest jumped, specific money managers have jumped into CAI International Inc (NYSE:CAI) headfirst. No Street Capital, managed by Jeff Osher, established the most valuable position in CAI International Inc (NYSE:CAI). No Street Capital had $6.2 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also initiated a $4.6 million position during the quarter. The only other fund with a brand new CAI position is Peter Algert’s Algert Global.

Let’s also examine hedge fund activity in other stocks similar to CAI International Inc (NYSE:CAI). These stocks are Plantronics, Inc. (NYSE:PLT), Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX), MagnaChip Semiconductor Corporation (NYSE:MX), Preferred Bank (NASDAQ:PFBC), Ocular Therapeutix Inc (NASDAQ:OCUL), Allegiance Bancshares, Inc. (NASDAQ:ABTX), and AVROBIO, Inc. (NASDAQ:AVRO). This group of stocks’ market values match CAI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLT 14 20398 4
BLX 2 9318 -1
MX 27 252487 2
PFBC 10 20264 1
OCUL 12 105293 1
ABTX 4 4232 -1
AVRO 17 121702 0
Average 12.3 76242 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $119 million in CAI’s case. MagnaChip Semiconductor Corporation (NYSE:MX) is the most popular stock in this table. On the other hand Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is the least popular one with only 2 bullish hedge fund positions. CAI International Inc (NYSE:CAI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CAI is 39.6. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CAI as the stock returned 24.3% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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