Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Costamare Inc (NYSE:CMRE).
Is CMRE a good stock to buy now? Costamare Inc (NYSE:CMRE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of September. Our calculations also showed that CMRE 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). At the end of this article we will also compare CMRE to other stocks including Axcelis Technologies Inc (NASDAQ:ACLS), China Yuchai International Limited (NYSE:CYD), and Benchmark Electronics, Inc. (NYSE:BHE) to get a better sense of its popularity.
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 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.
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. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing Costamare Inc (NYSE:CMRE).
Do Hedge Funds Think CMRE Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CMRE over the last 21 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Costamare Inc (NYSE:CMRE) was held by Renaissance Technologies, which reported holding $18.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $5.3 million position. Other investors bullish on the company included Portolan Capital Management, Invenomic Capital Management, and Horizon Asset Management. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Costamare Inc (NYSE:CMRE), around 1.01% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, dishing out 0.21 percent of its 13F equity portfolio to CMRE.
Since Costamare Inc (NYSE:CMRE) has faced bearish sentiment from the smart money, we can see that there lies a certain “tier” of fund managers that elected to cut their full holdings last quarter. Intriguingly, Louis Navellier’s Navellier & Associates sold off the biggest investment of all the hedgies tracked by Insider Monkey, totaling about $1 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund sold off about $0.5 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Costamare Inc (NYSE:CMRE). These stocks are Axcelis Technologies Inc (NASDAQ:ACLS), China Yuchai International Limited (NYSE:CYD), Benchmark Electronics, Inc. (NYSE:BHE), Agenus Inc (NASDAQ:AGEN), Standex International Corp. (NYSE:SXI), TriCo Bancshares (NASDAQ:TCBK), and Tucows Inc. (NASDAQ:TCX). This group of stocks’ market valuations are closest to CMRE’s market valuation.
|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 11.7 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $33 million in CMRE’s case. Axcelis Technologies Inc (NASDAQ:ACLS) is the most popular stock in this table. On the other hand Tucows Inc. (NASDAQ:TCX) is the least popular one with only 8 bullish hedge fund positions. Costamare Inc (NYSE:CMRE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMRE is 47.5. 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. Hedge funds were also right about betting on CMRE as the stock returned 23.2% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.