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Is Cemtrex Inc. (CETX) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Cemtrex Inc. (NASDAQ:CETX) based on that data.

Cemtrex Inc. (NASDAQ:CETX) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Our calculations also showed that CETX 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding Cemtrex Inc. (NASDAQ:CETX).

Hedge fund activity in Cemtrex Inc. (NASDAQ:CETX)

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 200% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CETX over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the largest position in Cemtrex Inc. (NASDAQ:CETX). Renaissance Technologies has a $0.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Cemtrex Inc. (NASDAQ:CETX), around 0.0002% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0 percent of its 13F equity portfolio to CETX.

As industrywide interest jumped, some big names have jumped into Cemtrex Inc. (NASDAQ:CETX) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the biggest position in Cemtrex Inc. (NASDAQ:CETX). Two Sigma Advisors had $0 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cemtrex Inc. (NASDAQ:CETX) but similarly valued. We will take a look at Tengasco, Inc. (NYSE:TGC), Cellect Biotechnology Ltd. (NASDAQ:APOP), SunLink Health Systems, Inc. (NYSE:SSY), and Phio Pharmaceuticals Corp. (NASDAQ:PHIO). All of these stocks’ market caps are similar to CETX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TGC 1 73 0
APOP 1 275 0
SSY 2 146 0
PHIO 2 525 1
Average 1.5 255 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.5 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $0 million in CETX’s case. SunLink Health Systems, Inc. (NYSE:SSY) is the most popular stock in this table. On the other hand Tengasco, Inc. (NYSE:TGC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Cemtrex Inc. (NASDAQ:CETX) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on CETX, though not to the same extent, as the stock returned 14.8% in Q2 (through May 22nd) and outperformed the market as well.

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