Is Cannae Holdings, Inc. (CNNE) Going to Burn These Hedge Funds?

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. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Cannae Holdings, Inc. (NYSE:CNNE).

Cannae Holdings, Inc. (NYSE:CNNE) investors should be aware of a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that CNNE isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

At the moment there are dozens of gauges market participants use to analyze stocks. Some of the most under-the-radar gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can trounce their index-focused peers by a solid amount (see the details here).

Michael Price MFP Investors

Michael Price of MFP Investors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the recent hedge fund action regarding Cannae Holdings, Inc. (NYSE:CNNE).

How have hedgies been trading Cannae Holdings, Inc. (NYSE:CNNE)?

At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -35% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CNNE over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CNNE A Good Stock To Buy?

Among these funds, Nitorum Capital held the most valuable stake in Cannae Holdings, Inc. (NYSE:CNNE), which was worth $104.6 million at the end of the third quarter. On the second spot was Lomas Capital Management which amassed $48.5 million worth of shares. Millennium Management, Bayberry Capital Partners, and Islet Management 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 Nitorum Capital allocated the biggest weight to Cannae Holdings, Inc. (NYSE:CNNE), around 8.1% of its 13F portfolio. Bayberry Capital Partners is also relatively very bullish on the stock, designating 7.08 percent of its 13F equity portfolio to CNNE.

Judging by the fact that Cannae Holdings, Inc. (NYSE:CNNE) has experienced a decline in interest from the smart money, it’s safe to say that there were a few hedgies that slashed their full holdings in the first quarter. At the top of the heap, Jeffrey Talpins’s Element Capital Management cut the largest position of the 750 funds watched by Insider Monkey, totaling an estimated $11.2 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund dropped about $9.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 11 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Cannae Holdings, Inc. (NYSE:CNNE). These stocks are Devon Energy Corporation (NYSE:DVN), Nexstar Media Group, Inc. (NASDAQ:NXST), Sinopec Shanghai Petrochemical Co. (NYSE:SHI), and Medpace Holdings, Inc. (NASDAQ:MEDP). This group of stocks’ market caps are closest to CNNE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DVN 42 222790 -12
NXST 41 662726 1
SHI 3 11620 0
MEDP 17 183270 0
Average 25.75 270102 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $241 million in CNNE’s case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Co. (NYSE:SHI) is the least popular one with only 3 bullish hedge fund positions. Cannae Holdings, Inc. (NYSE:CNNE) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately CNNE wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CNNE investors were disappointed as the stock returned 12.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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