Is Cato Corp (CATO) A Good Stock To Buy?

Since Cato Corp (NYSE:CATO) has experienced a declination in interest from the aggregate hedge fund industry, logic holds that there were a few money managers that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Peter Muller’s PDT Partners dropped the largest position of all the hedgies followed by Insider Monkey, worth close to $0.5 million in stock. Thomas Bailard’s fund, Bailard Inc, also cut its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Cato Corp (NYSE:CATO). These stocks are The Andersons, Inc. (NASDAQ:ANDE), Stewart Information Services Corp (NYSE:STC), Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), and A. Schulman Inc (NASDAQ:SHLM). This group of stocks’ market values are closest to CATO’s market value.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $109 million in CATO’s case. A. Schulman Inc (NASDAQ:SHLM) is the most popular stock in this table. On the other hand The Andersons, Inc. (NASDAQ:ANDE) is the least popular one with only 8 bullish hedge fund positions. Cato Corp (NYSE:CATO) 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 SHLM might be a better candidate to consider a long position.