The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded California Water Service Group (NYSE:CWT) based on those filings.
Is CWT a good stock to buy now? California Water Service Group (NYSE:CWT) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. CWT has experienced a decrease in enthusiasm from smart money recently. There were 16 hedge funds in our database with CWT holdings at the end of June. Our calculations also showed that CWT 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.
If you’d ask most stock holders, hedge funds are assumed to be worthless, outdated investment tools of the past. While there are more than 8000 funds with their doors open at present, We look at the leaders of this group, about 850 funds. These hedge fund managers command the lion’s share of the hedge fund industry’s total capital, and by monitoring their unrivaled picks, Insider Monkey has deciphered various investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 take a gander at the recent hedge fund action regarding California Water Service Group (NYSE:CWT).
Do Hedge Funds Think CWT Is A Good Stock To Buy Now?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CWT over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Impax Asset Management held the most valuable stake in California Water Service Group (NYSE:CWT), which was worth $64.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $8 million worth of shares. Engineers Gate Manager, GLG Partners, and PDT Partners 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 Impax Asset Management allocated the biggest weight to California Water Service Group (NYSE:CWT), around 0.56% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to CWT.
Because California Water Service Group (NYSE:CWT) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers who sold off their positions entirely last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, totaling close to $1.6 million in stock. Farnum Brown and Adam Seitchik’s fund, Arjuna Capital, also said goodbye to its stock, about $0.6 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to California Water Service Group (NYSE:CWT). We will take a look at Apple Hospitality REIT Inc (NYSE:APLE), Applied Industrial Technologies Inc (NYSE:AIT), Copa Holdings, S.A. (NYSE:CPA), Arcosa, Inc. (NYSE:ACA), SunPower Corporation (NASDAQ:SPWR), Mesoblast Limited (NASDAQ:MESO), and iRobot Corporation (NASDAQ:IRBT). This group of stocks’ market caps are closest to CWT’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 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $83 million in CWT’s case. iRobot Corporation (NASDAQ:IRBT) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 3 bullish hedge fund positions. California Water Service Group (NYSE:CWT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CWT is 49. 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 CWT as the stock returned 15.4% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.