Is CPK A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Chesapeake Utilities Corporation (NYSE:CPK).

Is CPK a good stock to buy now? Chesapeake Utilities Corporation (NYSE:CPK) has seen a decrease in enthusiasm from smart money recently. Chesapeake Utilities Corporation (NYSE:CPK) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. Our calculations also showed that CPK 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.

In the eyes of most stock holders, hedge funds are assumed to be unimportant, outdated investment tools of the past. While there are over 8000 funds trading at present, We look at the masters of this group, about 850 funds. These money managers watch over bulk of the smart money’s total asset base, and by keeping track of their inimitable stock picks, Insider Monkey has come up with numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Mario Gabelli of GAMCO Investors

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 review the latest hedge fund action surrounding Chesapeake Utilities Corporation (NYSE:CPK).

How are hedge funds trading Chesapeake Utilities Corporation (NYSE:CPK)?

At third quarter’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CPK over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Chesapeake Utilities Corporation (NYSE:CPK), which was worth $5.4 million at the end of the third quarter. On the second spot was Brasada Capital Management which amassed $1.5 million worth of shares. Two Sigma Advisors, GAMCO Investors, and Engineers Gate Manager 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 Brasada Capital Management allocated the biggest weight to Chesapeake Utilities Corporation (NYSE:CPK), around 0.38% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to CPK.

Judging by the fact that Chesapeake Utilities Corporation (NYSE:CPK) has faced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely in the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $0.9 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund dropped about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Chesapeake Utilities Corporation (NYSE:CPK) but similarly valued. These stocks are Tri Continental Corporation (NYSE:TY), GreenTree Hospitality Group Ltd. (NYSE:GHG), Northwest Natural Holding Company (NYSE:NWN), Belden Inc. (NYSE:BDC), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), PROS Holdings, Inc. (NYSE:PRO), and Super Micro Computer, Inc. (NASDAQ:SMCI). This group of stocks’ market valuations match CPK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TY 2 556 -1
GHG 7 19299 2
NWN 14 18269 0
BDC 16 108567 -3
KLIC 24 200684 -8
PRO 19 195224 0
SMCI 19 423049 -3
Average 14.4 137950 -1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $9 million in CPK’s case. Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 2 bullish hedge fund positions. Chesapeake Utilities Corporation (NYSE:CPK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPK is 31.9. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on CPK as the stock returned 23.5% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.

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