After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Cadiz Inc (NASDAQ:CDZI).
Is CDZI a good stock to buy now? Cadiz Inc (NASDAQ:CDZI) investors should pay attention to a decrease in support from the world’s most elite money managers lately. Cadiz Inc (NASDAQ:CDZI) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. Our calculations also showed that CDZI 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.
In the eyes of most shareholders, hedge funds are perceived as underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds trading today, We choose to focus on the top tier of this club, about 850 funds. Most estimates calculate that this group of people preside over most of all hedge funds’ total capital, and by tracking their unrivaled picks, Insider Monkey has discovered several investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 we’re going to review the new hedge fund action encompassing Cadiz Inc (NASDAQ:CDZI).
Hedge fund activity in Cadiz Inc (NASDAQ:CDZI)
At third quarter’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CDZI over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Elkhorn Partners was the largest shareholder of Cadiz Inc (NASDAQ:CDZI), with a stake worth $3 million reported as of the end of September. Trailing Elkhorn Partners was D E Shaw, which amassed a stake valued at $1.2 million. Marshall Wace LLP, Renaissance Technologies, and AQR Capital 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 Elkhorn Partners allocated the biggest weight to Cadiz Inc (NASDAQ:CDZI), around 2.37% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to CDZI.
Due to the fact that Cadiz Inc (NASDAQ:CDZI) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings last quarter. Interestingly, Crispin Odey’s Odey Asset Management Group dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $4.5 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund sold off about $0.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cadiz Inc (NASDAQ:CDZI) but similarly valued. We will take a look at Experience Investment Corp. (NASDAQ:EXPC), Orchid Island Capital, Inc. (NYSE:ORC), Osmotica Pharmaceuticals plc (NASDAQ:OSMT), HF Foods Group Inc. (NASDAQ:HFFG), Cytosorbents Corp (NASDAQ:CTSO), Bridge Bancorp, Inc. (NASDAQ:BDGE), and Crawford & Company (NYSE:CRD). This group of stocks’ market caps resemble CDZI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $6 million in CDZI’s case. Experience Investment Corp. (NASDAQ:EXPC) is the most popular stock in this table. On the other hand HF Foods Group Inc. (NASDAQ:HFFG) is the least popular one with only 2 bullish hedge fund positions. Cadiz Inc (NASDAQ:CDZI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CDZI is 32.7. 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. 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 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 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately CDZI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CDZI investors were disappointed as the stock returned 1.2% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.