In this article we will take a look at whether hedge funds think Cronos Group Inc. (NASDAQ:CRON) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is CRON a good stock to buy now? Prominent investors were turning less bullish. The number of bullish hedge fund bets were trimmed by 4 recently. Cronos Group Inc. (NASDAQ:CRON) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 14. Our calculations also showed that CRON 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind we’re going to take a peek at the key hedge fund action regarding Cronos Group Inc. (NASDAQ:CRON).
How have hedgies been trading Cronos Group Inc. (NASDAQ:CRON)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CRON over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Chescapmanager LLC held the most valuable stake in Cronos Group Inc. (NASDAQ:CRON), which was worth $44.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $4.2 million worth of shares. D E Shaw, GLG Partners, and OZ Management 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 Chescapmanager LLC allocated the biggest weight to Cronos Group Inc. (NASDAQ:CRON), around 7.19% of its 13F portfolio. OZ Management is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to CRON.
Due to the fact that Cronos Group Inc. (NASDAQ:CRON) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers who were dropping their full holdings heading into Q4. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest stake of the 750 funds monitored by Insider Monkey, valued at close to $0.8 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund sold off about $0.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Cronos Group Inc. (NASDAQ:CRON). These stocks are Big Lots, Inc. (NYSE:BIG), Editas Medicine, Inc. (NASDAQ:EDIT), Minerals Technologies Inc (NYSE:MTX), CIT Group Inc. (NYSE:CIT), Winnebago Industries, Inc. (NYSE:WGO), SJW Corp. (NYSE:SJW), and Simmons First National Corporation (NASDAQ:SFNC). This group of stocks’ market values are closest to CRON’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 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $60 million in CRON’s case. Winnebago Industries, Inc. (NYSE:WGO) is the most popular stock in this table. On the other hand SJW Corp. (NYSE:SJW) is the least popular one with only 9 bullish hedge fund positions. Cronos Group Inc. (NASDAQ:CRON) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CRON is 25.1. 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. A small number of hedge funds were also right about betting on CRON as the stock returned 72.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.