At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Seacor Holdings, Inc. (NYSE:CKH).
Is CKH a good stock to buy now? The best stock pickers were becoming hopeful. The number of bullish hedge fund bets advanced by 2 in recent months. Seacor Holdings, Inc. (NYSE:CKH) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 19. Our calculations also showed that CKH 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). There were 8 hedge funds in our database with CKH positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let’s review the fresh hedge fund action surrounding Seacor Holdings, Inc. (NYSE:CKH).
Do Hedge Funds Think CKH Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CKH over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Seacor Holdings, Inc. (NYSE:CKH), with a stake worth $38.9 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $33.7 million. Adage Capital Management, Arrowstreet Capital, and D E Shaw 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 Royce & Associates allocated the biggest weight to Seacor Holdings, Inc. (NYSE:CKH), around 0.42% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to CKH.
Now, specific money managers have jumped into Seacor Holdings, Inc. (NYSE:CKH) headfirst. Magnetar Capital, managed by Alec Litowitz and Ross Laser, established the largest position in Seacor Holdings, Inc. (NYSE:CKH). Magnetar Capital had $0.2 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also made a $0 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Seacor Holdings, Inc. (NYSE:CKH). These stocks are Republic Bancorp, Inc. KY (NASDAQ:RBCAA), Groupon Inc (NASDAQ:GRPN), SpartanNash Company (NASDAQ:SPTN), Ambac Financial Group, Inc. (NASDAQ:AMBC), HomeStreet Inc (NASDAQ:HMST), Qutoutiao Inc. (NASDAQ:QTT), and First Foundation Inc (NASDAQ:FFWM). All of these stocks’ market caps are closest to CKH’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 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $87 million in CKH’s case. First Foundation Inc (NASDAQ:FFWM) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 4 bullish hedge fund positions. Seacor Holdings, Inc. (NYSE:CKH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CKH is 45.9. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CKH as the stock returned 43.2% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.