The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about Cosan Limited (NYSE:CZZ)?
Is CZZ a good stock to buy now? Hedge fund interest in Cosan Limited (NYSE:CZZ) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CZZ 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Agree Realty Corporation (NYSE:ADC), Unum Group (NYSE:UNM), and Boyd Gaming Corporation (NYSE:BYD) to gather more data points.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 key hedge fund action regarding Cosan Limited (NYSE:CZZ).
Do Hedge Funds Think CZZ Is A Good Stock To Buy Now?
At third quarter’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in CZZ a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the most valuable position in Cosan Limited (NYSE:CZZ), worth close to $102.8 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $15.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Qtron Investments allocated the biggest weight to Cosan Limited (NYSE:CZZ), around 0.41% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to CZZ.
Due to the fact that Cosan Limited (NYSE:CZZ) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there were a few hedgies that elected to cut their positions entirely by the end of the third quarter. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management sold off the biggest position of the 750 funds followed by Insider Monkey, totaling close to $1.1 million in stock, and Lee Ainslie’s Maverick Capital was right behind this move, as the fund dumped about $1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Cosan Limited (NYSE:CZZ). These stocks are Agree Realty Corporation (NYSE:ADC), Unum Group (NYSE:UNM), Boyd Gaming Corporation (NYSE:BYD), Cannae Holdings, Inc. (NYSE:CNNE), South State Corporation (NASDAQ:SSB), Brooks Automation, Inc. (NASDAQ:BRKS), and LiveRamp Holdings, Inc. (NYSE:RAMP). This group of stocks’ market caps are similar to CZZ’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 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $131 million in CZZ’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand Agree Realty Corporation (NYSE:ADC) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Cosan Limited (NYSE:CZZ) is even less popular than ADC. Our overall hedge fund sentiment score for CZZ is 23.3. 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. Hedge funds clearly dropped the ball on CZZ as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 CZZ as the stock returned 25% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.