Should I Buy Chesapeake Utilities Corporation (CPK)?

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. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Chesapeake Utilities Corporation (NYSE:CPK).

Chesapeake Utilities Corporation (NYSE:CPK) shareholders have witnessed an increase in hedge fund interest in recent months. Chesapeake Utilities Corporation (NYSE:CPK) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 12. There were 4 hedge funds in our database with CPK holdings at the end of December. Our calculations also showed that CPK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mark McMeans of Brasada Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a peek at the recent hedge fund action encompassing Chesapeake Utilities Corporation (NYSE:CPK).

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

At first quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CPK over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of Chesapeake Utilities Corporation (NYSE:CPK), with a stake worth $2.6 million reported as of the end of March. Trailing Citadel Investment Group was Brasada Capital Management, which amassed a stake valued at $2.6 million. GAMCO Investors, ExodusPoint Capital, 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 Brasada Capital Management allocated the biggest weight to Chesapeake Utilities Corporation (NYSE:CPK), around 0.55% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to CPK.

As industrywide interest jumped, key hedge funds were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, created the most outsized position in Chesapeake Utilities Corporation (NYSE:CPK). ExodusPoint Capital had $0.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.2 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chesapeake Utilities Corporation (NYSE:CPK) but similarly valued. These stocks are EHang Holdings Limited (NASDAQ:EH), Liberty Oilfield Services Inc. (NYSE:LBRT), bluebird bio Inc (NASDAQ:BLUE), Talend S.A. (NASDAQ:TLND), Prelude Therapeutics Incorporated (NASDAQ:PRLD), NMI Holdings Inc (NASDAQ:NMIH), and Holly Energy Partners, L.P. (NYSE:HEP). All of these stocks’ market caps match CPK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EH 4 7063 2
LBRT 10 41393 2
BLUE 27 226229 -1
TLND 45 1142089 18
PRLD 7 1340901 -1
NMIH 25 262921 3
HEP 2 3616 -1
Average 17.1 432030 3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $7 million in CPK’s case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 2 bullish hedge fund positions. Chesapeake Utilities Corporation (NYSE:CPK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPK is 26.7. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately CPK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CPK investors were disappointed as the stock returned 6.5% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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