Is CVGW A Good Stock To Buy Now?

In this article we will take a look at whether hedge funds think Calavo Growers, Inc. (NASDAQ:CVGW) 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 CVGW a good stock to buy now? Prominent investors were becoming less hopeful. The number of long hedge fund bets shrunk by 3 lately. Calavo Growers, Inc. (NASDAQ:CVGW) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 23. Our calculations also showed that CVGW 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.

To the average investor there are plenty of formulas shareholders use to analyze stocks. A duo of the most useful formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best fund managers can trounce their index-focused peers by a very impressive amount (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

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 let’s check out the latest hedge fund action regarding Calavo Growers, Inc. (NASDAQ:CVGW).

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

At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in CVGW a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

The largest stake in Calavo Growers, Inc. (NASDAQ:CVGW) was held by Renaissance Technologies, which reported holding $36.8 million worth of stock at the end of September. It was followed by Cardinal Capital with a $18.8 million position. Other investors bullish on the company included GLG Partners, Citadel Investment Group, and GAMCO Investors. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Calavo Growers, Inc. (NASDAQ:CVGW), around 0.79% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to CVGW.

Because Calavo Growers, Inc. (NASDAQ:CVGW) has faced bearish sentiment from hedge fund managers, logic holds that there exists a select few hedgies who were dropping their full holdings heading into Q4. Interestingly, Greg Eisner’s Engineers Gate Manager sold off the biggest position of all the hedgies monitored by Insider Monkey, valued at an estimated $0.7 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund cut about $0.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Calavo Growers, Inc. (NASDAQ:CVGW) but similarly valued. We will take a look at Fortuna Silver Mines Inc. (NYSE:FSM), NBT Bancorp Inc. (NASDAQ:NBTB), FB Financial Corporation (NYSE:FBK), Stewart Information Services Corp (NYSE:STC), Helios Technologies, Inc. (NASDAQ:HLIO), Intellia Therapeutics, Inc. (NASDAQ:NTLA), and Sixth Street Specialty Lending Inc (NYSE:TSLX). This group of stocks’ market caps resemble CVGW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FSM 13 53788 4
NBTB 8 10403 -1
FBK 9 49679 -3
STC 19 103657 4
HLIO 8 55418 -1
NTLA 15 62356 -2
TSLX 11 75906 1
Average 11.9 58744 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $80 million in CVGW’s case. Stewart Information Services Corp (NYSE:STC) is the most popular stock in this table. On the other hand NBT Bancorp Inc. (NASDAQ:NBTB) is the least popular one with only 8 bullish hedge fund positions. Calavo Growers, Inc. (NASDAQ:CVGW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CVGW is 30. 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 CVGW as the stock returned 12.8% 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.