At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Cowen Inc. (NASDAQ:COWN) makes for a good investment right now.
Is COWN a good stock to buy now? Cowen Inc. (NASDAQ:COWN) has experienced an increase in activity from the world’s largest hedge funds recently. Cowen Inc. (NASDAQ:COWN) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that COWN 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).
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. Now let’s take a peek at the latest hedge fund action regarding Cowen Inc. (NASDAQ:COWN).
Do Hedge Funds Think COWN Is A Good Stock To Buy Now?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in COWN a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Paul J. Isaac’s Arbiter Partners Capital Management has the most valuable position in Cowen Inc. (NASDAQ:COWN), worth close to $31.7 million, corresponding to 1.4% of its total 13F portfolio. On Arbiter Partners Capital Management’s heels is Pzena Investment Management, led by Richard S. Pzena, holding a $19.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise D. E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John W. Rogers’s Ariel Investments. In terms of the portfolio weights assigned to each position Arbiter Partners Capital Management allocated the biggest weight to Cowen Inc. (NASDAQ:COWN), around 1.42% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, dishing out 1.02 percent of its 13F equity portfolio to COWN.
Now, key hedge funds were breaking ground themselves. Renaissance Technologies, established the most valuable position in Cowen Inc. (NASDAQ:COWN). Renaissance Technologies had $2.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $1.5 million position during the quarter. The other funds with brand new COWN positions are John Overdeck and David Siegel’s Two Sigma Advisors, John A. Levin’s Levin Capital Strategies, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks similar to Cowen Inc. (NASDAQ:COWN). We will take a look at The First Bancshares, Inc. (NASDAQ:FBMS), Antares Pharma Inc (NASDAQ:ATRS), Geopark Ltd (NYSE:GPRK), Global Partners LP (NYSE:GLP), Despegar.com, Corp. (NYSE:DESP), Cue Biopharma, Inc. (NASDAQ:CUE), and NetSTREIT Corp. (NYSE:NTST). This group of stocks’ market values resemble COWN’s market value.
|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 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $105 million in COWN’s case. Antares Pharma Inc (NASDAQ:ATRS) is the most popular stock in this table. On the other hand Global Partners LP (NYSE:GLP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Cowen Inc. (NASDAQ:COWN) is more popular among hedge funds. Our overall hedge fund sentiment score for COWN is 88. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on COWN as the stock returned 59.8% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.