Is Core-Mark Holding Company, Inc. (CORE) Going To Burn These Hedge Funds ?

We at Insider Monkey have gone over 752 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 September 30th. In this article, we look at what those funds think of Core-Mark Holding Company, Inc. (NASDAQ:CORE) based on that data.

Is Core-Mark Holding Company, Inc. (NASDAQ:CORE) the right investment to pursue these days? Investors who are in the know are in a pessimistic mood. The number of long hedge fund positions went down by 6 in recent months. Our calculations also showed that CORE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the new hedge fund action surrounding Core-Mark Holding Company, Inc. (NASDAQ:CORE).

What does smart money think about Core-Mark Holding Company, Inc. (NASDAQ:CORE)?

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in CORE a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Core-Mark Holding Company, Inc. (NASDAQ:CORE) was held by Renaissance Technologies, which reported holding $16.8 million worth of stock at the end of September. It was followed by D E Shaw with a $8.5 million position. Other investors bullish on the company included Arrowstreet Capital, Marshall Wace, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Core-Mark Holding Company, Inc. (NASDAQ:CORE), around 0.3% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, designating 0.13 percent of its 13F equity portfolio to CORE.

Since Core-Mark Holding Company, Inc. (NASDAQ:CORE) has witnessed bearish sentiment from the smart money, it’s easy to see that there is a sect of hedgies that slashed their positions entirely last quarter. Intriguingly, Peter Muller’s PDT Partners cut the largest investment of all the hedgies tracked by Insider Monkey, totaling about $3.4 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $1.2 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 6 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Core-Mark Holding Company, Inc. (NASDAQ:CORE) but similarly valued. These stocks are Upwork Inc. (NASDAQ:UPWK), Eventbrite, Inc. (NYSE:EB), Suburban Propane Partners LP (NYSE:SPH), and Inspire Medical Systems, Inc. (NYSE:INSP). This group of stocks’ market values are similar to CORE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UPWK 19 122995 9
EB 23 267307 2
SPH 4 83169 0
INSP 18 288277 -1
Average 16 190437 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $51 million in CORE’s case. Eventbrite, Inc. (NYSE:EB) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only 4 bullish hedge fund positions. Core-Mark Holding Company, Inc. (NASDAQ:CORE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CORE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CORE were disappointed as the stock returned -15.7% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.

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