Is CXW 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 Corecivic Inc. (NYSE:CXW) based on that data.

Is CXW a good stock to buy now? Corecivic Inc. (NYSE:CXW) has seen an increase in hedge fund sentiment of late. Corecivic Inc. (NYSE:CXW) was in 19 hedge funds’ portfolios at the end of September. The all time high for this statistic is 27. There were 15 hedge funds in our database with CXW positions at the end of the second quarter. Our calculations also showed that CXW 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.


Joel Greenblatt of Gotham 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 we’re going to take a peek at the fresh hedge fund action surrounding Corecivic Inc. (NYSE:CXW).

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

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CXW over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

More specifically, Arrowstreet Capital was the largest shareholder of Corecivic Inc. (NYSE:CXW), with a stake worth $16.5 million reported as of the end of September. Trailing Arrowstreet Capital was Renaissance Technologies, which amassed a stake valued at $12.8 million. Intrinsic Edge Capital, Two Sigma Advisors, and Balyasny Asset 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 Hourglass Capital allocated the biggest weight to Corecivic Inc. (NYSE:CXW), around 0.82% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.46 percent of its 13F equity portfolio to CXW.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Intrinsic Edge Capital, managed by Mark Coe, assembled the most outsized position in Corecivic Inc. (NYSE:CXW). Intrinsic Edge Capital had $6.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Hoon Kim’s Quantinno Capital, and Joel Greenblatt’s Gotham Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Corecivic Inc. (NYSE:CXW) but similarly valued. We will take a look at National HealthCare Corporation (NYSE:NHC), Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), At Home Group Inc. (NYSE:HOME), Schweitzer-Mauduit International, Inc. (NYSE:SWM), Construction Partners, Inc. (NASDAQ:ROAD), Vocera Communications Inc (NYSE:VCRA), and PetIQ, Inc. (NASDAQ:PETQ). This group of stocks’ market caps are similar to CXW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NHC 10 55809 -1
RYTM 10 227247 -1
HOME 34 370504 7
SWM 11 16466 2
ROAD 11 35881 1
VCRA 18 181990 3
PETQ 13 132362 -3
Average 15.3 145751 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $54 million in CXW’s case. At Home Group Inc. (NYSE:HOME) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSE:NHC) is the least popular one with only 10 bullish hedge fund positions. Corecivic Inc. (NYSE:CXW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CXW is 48.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately CXW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CXW were disappointed as the stock returned -1.8% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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