Is CBL & Associates Properties, Inc. (CBL) A Good Stock To Buy ?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like CBL & Associates Properties, Inc. (NYSE:CBL).

CBL & Associates Properties, Inc. (NYSE:CBL) has experienced an increase in enthusiasm from smart money lately. CBL was in 15 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with CBL holdings at the end of the previous quarter. Our calculations also showed that CBL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Christian Leone of Luxor Capital Group

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the new hedge fund action surrounding CBL & Associates Properties, Inc. (NYSE:CBL).

What does smart money think about CBL & Associates Properties, Inc. (NYSE:CBL)?

Heading into the fourth quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CBL over the last 17 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.

The largest stake in CBL & Associates Properties, Inc. (NYSE:CBL) was held by Luxor Capital Group, which reported holding $8.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $5.7 million position. Other investors bullish on the company included ZWEIG DIMENNA PARTNERS, Indaba Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Snow Park Capital Partners allocated the biggest weight to CBL & Associates Properties, Inc. (NYSE:CBL), around 1.48% of its 13F portfolio. Indaba Capital Management is also relatively very bullish on the stock, earmarking 0.41 percent of its 13F equity portfolio to CBL.

Now, key hedge funds have jumped into CBL & Associates Properties, Inc. (NYSE:CBL) headfirst. Luxor Capital Group, managed by Christian Leone, assembled the most valuable position in CBL & Associates Properties, Inc. (NYSE:CBL). Luxor Capital Group had $8.9 million invested in the company at the end of the quarter. Derek C. Schrier’s Indaba Capital Management also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new CBL investors: Michael Hintze’s CQS Cayman LP, Michael Gelband’s ExodusPoint Capital, and Cliff Asness’s AQR Capital Management.

Let’s now review hedge fund activity in other stocks similar to CBL & Associates Properties, Inc. (NYSE:CBL). We will take a look at Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), Select Bancorp, Inc. (NASDAQ:SLCT), Northern Dynasty Minerals Ltd. (NYSE:NAK), and Trecora Resources (NYSE:TREC). This group of stocks’ market values are closest to CBL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SPWH 21 42790 5
SLCT 5 10328 1
NAK 5 5817 -1
TREC 10 23735 2
Average 10.25 20668 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $23 million in CBL’s case. Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) is the most popular stock in this table. On the other hand Select Bancorp, Inc. (NASDAQ:SLCT) is the least popular one with only 5 bullish hedge fund positions. CBL & Associates Properties, Inc. (NYSE:CBL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CBL as the stock returned 11.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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