Is Casey’s General Stores, Inc. (CASY) a Good Buy?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Casey’s General Stores, Inc. (NASDAQ:CASY).

Is Casey’s General Stores, Inc. (NASDAQ:CASY) a healthy stock for your portfolio? The smart money is in an optimistic mood. The number of bullish hedge fund bets went up by 7 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Pitney Bowes Inc. (NYSE:PBI), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), and Zebra Technologies Corp. (NASDAQ:ZBRA) to gather more data points.

Keeping this in mind, let’s take a peek at the fresh action encompassing Casey’s General Stores, Inc. (NASDAQ:CASY).

Hedge fund activity in Casey’s General Stores, Inc. (NASDAQ:CASY)

Heading into Q4, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Hitchwood Capital Management, managed by James Crichton, holds the biggest position in Casey’s General Stores, Inc. (NASDAQ:CASY). Hitchwood Capital Management has a $51.5 million position in the stock, comprising 1.8% of its 13F portfolio. On Hitchwood Capital Management’s heels is Melvin Capital Management, led by Gabriel Plotkin, holding a $30.9 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Mario Gabelli’s GAMCO Investors, Steve Cohen’s Point72 Asset Management and Lee Munder’s Lee Munder Capital Group.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Hitchwood Capital Management, managed by James Crichton, assembled the most valuable position in Casey’s General Stores, Inc. (NASDAQ:CASY). Hitchwood Capital Management had $51.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $12.9 million position during the quarter. The other funds with new positions in the stock are George Hall’s Clinton Group, Peter Muller’s PDT Partners, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Casey’s General Stores, Inc. (NASDAQ:CASY) but similarly valued. We will take a look at Pitney Bowes Inc. (NYSE:PBI), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), Zebra Technologies Corp. (NASDAQ:ZBRA), and Echostar Corporation (NASDAQ:SATS). All of these stocks’ market caps resemble CASY’s market cap.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $501 million. That figure was $159 million in CASY’s case. Zebra Technologies Corp. (NASDAQ:ZBRA) is the most popular stock in this table. On the other hand Intercept Pharmaceuticals Inc (NASDAQ:ICPT) is the least popular one with only 18 bullish hedge fund positions. Casey’s General Stores, Inc. (NASDAQ:CASY) 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 ZBRA might be a better candidate to consider a long position.