Is CTO Realty Growth (CTO) A Good Stock To Buy Now?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is CTO Realty Growth Inc (NYSE:CTO), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is CTO Realty Growth (CTO) a good stock to buy now? CTO investors should pay attention to a decrease in support from the world’s most elite money managers recently. CTO Realty Growth Inc (NYSE:CTO) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. There were 12 hedge funds in our database with CTO holdings at the end of June. Our calculations also showed that CTO 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.

Clint Carlson of Carlson Capital

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. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding CTO Realty Growth Inc (NYSE:CTO).

How are hedge funds trading CTO Realty Growth Inc (NYSE:CTO)?

Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CTO over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Carlson Capital was the largest shareholder of CTO Realty Growth Inc (NYSE:CTO), with a stake worth $7.4 million reported as of the end of September. Trailing Carlson Capital was Magnetar Capital, which amassed a stake valued at $3.3 million. Intrepid Capital Management, Renaissance Technologies, and Winton Capital 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 Intrepid Capital Management allocated the biggest weight to CTO Realty Growth Inc (NYSE:CTO), around 1% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, setting aside 0.22 percent of its 13F equity portfolio to CTO.

Due to the fact that CTO Realty Growth Inc (NYSE:CTO) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that decided to sell off their full holdings heading into Q4. It’s worth mentioning that Alan S. Parsow’s Elkhorn Partners said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, comprising an estimated $1.6 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $1.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CTO Realty Growth Inc (NYSE:CTO) but similarly valued. These stocks are Concrete Pumping Holdings, Inc. (NASDAQ:BBCP), XOMA Corp (NASDAQ:XOMA), Arcimoto, Inc. (NASDAQ:FUV), Bioceres Crop Solutions Corp. (NYSE:BIOX), NL Industries, Inc. (NYSE:NL), Atomera Incorporated (NASDAQ:ATOM), and SmartFinancial, Inc. (NASDAQ:SMBK). This group of stocks’ market caps are similar to CTO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBCP 7 33602 0
XOMA 9 93108 -3
FUV 1 827 0
BIOX 2 323 -1
NL 2 1052 -1
ATOM 2 852 2
SMBK 7 16723 0
Average 4.3 20927 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $17 million in CTO’s case. XOMA Corp (NASDAQ:XOMA) is the most popular stock in this table. On the other hand Arcimoto, Inc. (NASDAQ:FUV) is the least popular one with only 1 bullish hedge fund positions. CTO Realty Growth Inc (NYSE:CTO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CTO is 64.8. 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. Hedge funds were also right about betting on CTO as the stock returned 19.8% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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