Should You Avoid Cimpress plc (CMPR)?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Cimpress plc (NASDAQ:CMPR).

Cimpress plc (NASDAQ:CMPR) was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. CMPR investors should pay attention to a decrease in hedge fund sentiment of late. There were 12 hedge funds in our database with CMPR holdings at the end of the previous quarter. Our calculations also showed that CMPR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most market participants, hedge funds are perceived as worthless, outdated financial tools of the past. While there are over 8000 funds in operation at present, Our researchers choose to focus on the upper echelon of this club, about 750 funds. These hedge fund managers control most of the smart money’s total asset base, and by following their best equity investments, Insider Monkey has brought to light many investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to analyze the new hedge fund action encompassing Cimpress plc (NASDAQ:CMPR).

What does smart money think about Cimpress plc (NASDAQ:CMPR)?

Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CMPR over the last 17 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Zachary Sternberg and Benjamin Stein’s Spruce House Investment Management has the largest position in Cimpress plc (NASDAQ:CMPR), worth close to $311 million, amounting to 11.3% of its total 13F portfolio. On Spruce House Investment Management’s heels is Arlington Value Capital, led by Allan Mecham and Ben Raybould, holding a $275 million position; the fund has 18% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain David E. Shaw’s D E Shaw, Brian Bares’s Bares Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Arlington Value Capital allocated the biggest weight to Cimpress plc (NASDAQ:CMPR), around 17.98% of its 13F portfolio. Spruce House Investment Management is also relatively very bullish on the stock, earmarking 11.25 percent of its 13F equity portfolio to CMPR.

Judging by the fact that Cimpress plc (NASDAQ:CMPR) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies that elected to cut their positions entirely heading into Q4. Intriguingly, Ric Dillon’s Diamond Hill Capital sold off the biggest investment of all the hedgies watched by Insider Monkey, totaling an estimated $6.5 million in stock, and Brian Gootzeit and Andrew Frank’s StackLine Partners was right behind this move, as the fund sold off about $4.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Cimpress plc (NASDAQ:CMPR) but similarly valued. We will take a look at MSC Industrial Direct Co Inc (NYSE:MSM), Stifel Financial Corp. (NYSE:SF), Nomad Foods Limited (NYSE:NOMD), and FTI Consulting, Inc. (NYSE:FCN). This group of stocks’ market caps resemble CMPR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSM 21 89777 5
SF 12 154909 -3
NOMD 37 486749 5
FCN 18 138946 1
Average 22 217595 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $705 million in CMPR’s case. Nomad Foods Limited (NYSE:NOMD) is the most popular stock in this table. On the other hand Stifel Financial Corp. (NYSE:SF) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Cimpress plc (NASDAQ:CMPR) is even less popular than SF. Hedge funds dodged a bullet by taking a bearish stance towards CMPR. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CMPR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CMPR investors were disappointed as the stock returned -2.8% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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