Is CTRN A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 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 Citi Trends, Inc. (NASDAQ:CTRN) based on that data.

Is CTRN a good stock to buy now? Citi Trends, Inc. (NASDAQ:CTRN) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. Citi Trends, Inc. (NASDAQ:CTRN) was in 17 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 13 hedge funds in our database with CTRN holdings at the end of June. Our calculations also showed that CTRN 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ian Wace Marshall Wace

Ian Wace of Marshall Wace

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 we’re going to review the latest hedge fund action encompassing Citi Trends, Inc. (NASDAQ:CTRN).

Do Hedge Funds Think CTRN Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in CTRN 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.

Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Citi Trends, Inc. (NASDAQ:CTRN), worth close to $7.1 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Frederick DiSanto of Ancora Advisors, with a $6.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism include Elise Di Vincenzo Crumbine’s Stormborn Capital Management, Chuck Royce’s Royce & Associates and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Stormborn Capital Management allocated the biggest weight to Citi Trends, Inc. (NASDAQ:CTRN), around 3.24% of its 13F portfolio. AWH Capital is also relatively very bullish on the stock, designating 3.08 percent of its 13F equity portfolio to CTRN.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Manatuck Hill Partners, managed by Mark Broach, created the most outsized position in Citi Trends, Inc. (NASDAQ:CTRN). Manatuck Hill Partners had $3.1 million invested in the company at the end of the quarter. Austin Wiggins Hopper’s AWH Capital also initiated a $2.2 million position during the quarter. The other funds with brand new CTRN positions are Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Eisner’s Engineers Gate Manager.

Let’s also examine hedge fund activity in other stocks similar to Citi Trends, Inc. (NASDAQ:CTRN). We will take a look at Agile Therapeutics Inc (NASDAQ:AGRX), NuCana plc (NASDAQ:NCNA), ORBCOMM Inc (NASDAQ:ORBC), Metacrine, Inc. (NASDAQ:MTCR), Arbutus Biopharma Corp (NASDAQ:ABUS), Liminal BioSciences Inc. (NASDAQ:LMNL), and Stereotaxis Inc (NYSE:STXS). This group of stocks’ market valuations resemble CTRN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AGRX 9 53501 -1
NCNA 8 23107 4
ORBC 13 49298 -6
MTCR 8 25031 8
ABUS 9 9749 1
LMNL 1 34325 -1
STXS 14 107524 0
Average 8.9 43219 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $46 million in CTRN’s case. Stereotaxis Inc (NYSE:STXS) is the most popular stock in this table. On the other hand Liminal BioSciences Inc. (NASDAQ:LMNL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Citi Trends, Inc. (NASDAQ:CTRN) is more popular among hedge funds. Our overall hedge fund sentiment score for CTRN is 89. 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 CTRN as the stock returned 70.8% 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.