Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards CVB Financial Corp. (NASDAQ:CVBF) to find out whether there were any major changes in hedge funds’ views.
Is CVBF a good stock to buy now? The best stock pickers were taking a pessimistic view. The number of bullish hedge fund bets were cut by 1 lately. CVB Financial Corp. (NASDAQ:CVBF) was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. Our calculations also showed that CVBF 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). There were 14 hedge funds in our database with CVBF positions at the end of the second quarter.
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 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. Keeping this in mind we’re going to take a peek at the fresh hedge fund action encompassing CVB Financial Corp. (NASDAQ:CVBF).
Do Hedge Funds Think CVBF Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in CVBF 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.
Among these funds, Renaissance Technologies held the most valuable stake in CVB Financial Corp. (NASDAQ:CVBF), which was worth $16.2 million at the end of the third quarter. On the second spot was GLG Partners which amassed $8.4 million worth of shares. Millennium Management, Citadel Investment Group, and Holocene Advisors 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 Neo Ivy Capital allocated the biggest weight to CVB Financial Corp. (NASDAQ:CVBF), around 0.38% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to CVBF.
Since CVB Financial Corp. (NASDAQ:CVBF) has faced falling interest from the smart money, we can see that there lies a certain “tier” of money managers that slashed their entire stakes last quarter. Interestingly, Michael Gelband’s ExodusPoint Capital said goodbye to the largest investment of all the hedgies watched by Insider Monkey, worth close to $0.7 million in stock. Cliff Asness’s fund, AQR Capital Management, also sold off its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CVB Financial Corp. (NASDAQ:CVBF) but similarly valued. We will take a look at Vishay Intertechnology, Inc. (NYSE:VSH), CONMED Corporation (NYSE:CNMD), Arco Platform Limited (NASDAQ:ARCE), Strategic Education Inc (NASDAQ:STRA), GATX Corporation (NYSE:GATX), Pactiv Evergreen Inc. (NASDAQ:PTVE), and Xencor Inc (NASDAQ:XNCR). This group of stocks’ market caps are similar to CVBF’s market cap.
|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 20 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $34 million in CVBF’s case. CONMED Corporation (NYSE:CNMD) is the most popular stock in this table. On the other hand GATX Corporation (NYSE:GATX) is the least popular one with only 10 bullish hedge fund positions. CVB Financial Corp. (NASDAQ:CVBF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVBF is 38.4. 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 CVBF as the stock returned 20.1% 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.