Is CMC Materials, Inc. (CCMP) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider CMC Materials, Inc. (NASDAQ:CCMP) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is CCMP a good stock to buy now? CMC Materials, Inc. (NASDAQ:CCMP) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that CCMP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as BigCommerce Holdings, Inc. (NASDAQ:BIGC), Xerox Holdings Corporation (NASDAQ:XRX), and Viavi Solutions Inc (NASDAQ:VIAV) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to review the new hedge fund action encompassing CMC Materials, Inc. (NASDAQ:CCMP).

Do Hedge Funds Think CCMP Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in CCMP a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in CMC Materials, Inc. (NASDAQ:CCMP). Royce & Associates has a $77.1 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $38.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include D. E. Shaw’s D E Shaw, Marc Majzner’s Clearline Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Clearline Capital allocated the biggest weight to CMC Materials, Inc. (NASDAQ:CCMP), around 1.05% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 0.64 percent of its 13F equity portfolio to CCMP.

Since CMC Materials, Inc. (NASDAQ:CCMP) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers who were dropping their positions entirely in the third quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP cut the biggest position of all the hedgies tracked by Insider Monkey, worth close to $2.2 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to CMC Materials, Inc. (NASDAQ:CCMP). These stocks are BigCommerce Holdings, Inc. (NASDAQ:BIGC), Xerox Holdings Corporation (NASDAQ:XRX), Viavi Solutions Inc (NASDAQ:VIAV), Riskified Ltd. (NYSE:RSKD), frontdoor, inc. (NASDAQ:FTDR), Apple Hospitality REIT Inc (NYSE:APLE), and Altra Industrial Motion Corp. (NASDAQ:AIMC). This group of stocks’ market values are closest to CCMP’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $381 million. That figure was $191 million in CCMP’s case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand Altra Industrial Motion Corp. (NASDAQ:AIMC) is the least popular one with only 14 bullish hedge fund positions. CMC Materials, Inc. (NASDAQ:CCMP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CCMP is 50.7. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on CCMP as the stock returned 56.5% since the end of the third quarter (through 12/31) and outperformed the market by an even larger margin.

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