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Should You Buy Calgon Carbon Corporation (CCC)?

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Hedge fund interest in Calgon Carbon Corporation (NYSE:CCC) shares was flat at the end of last quarter. This is usually a negative indicator, coupled with the fact that the shares of the company dropped 19.61% during the quarter. In order to find out more about the hedge fund sentiments, we will discuss hedgies that had positions Calgon Carbon Corporation (NYSE:CCC), at the end of September.

For a better understanding of the hedge fund sentiment, we will also compare Calgon Carbon Corporation (NYSE:CCC) to other stocks, including Inland Real Estate Corporation (NYSE:IRC), GTT Communications Inc (NYSE:GTT), and Steiner Leisure Ltd (NASDAQ:STNR) to get a better sense of its popularity.

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In today’s marketplace, there are plenty of signals shareholders employ to appraise stocks. A duo of the less utilized signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite money managers can outpace their index-focused peers by a significant amount (see the details here).

Keeping this in mind, let’s check out the recent action encompassing Calgon Carbon Corporation (NYSE:CCC).

What have hedge funds been doing with Calgon Carbon Corporation (NYSE:CCC)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the most valuable position in Calgon Carbon Corporation (NYSE:CCC), worth close to $8.1 million, amounting to less than 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is Royce & Associates, managed by Chuck Royce, which holds a $1.5 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of Paul Marshall and Ian Wace’s Marshall Wace LLP, Jeffrey Moskowitz’s Harvey Partners, and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Calgon Carbon Corporation (NYSE:CCC) has experienced a declination in interest from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds that decided to sell off their positions entirely in the third quarter. Intriguingly, Peter Muller’s PDT Partners said goodbye to the biggest position of the 700 funds followed by Insider Monkey, totaling an estimated $1 million in stock, and Cliff Asness’ AQR Capital Management was right behind this move, as the fund sold off about $0.3 million worth of shares. These moves are intriguing to say the least, 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 Calgon Carbon Corporation (NYSE:CCC). We will take a look at Inland Real Estate Corporation (NYSE:IRC), GTT Communications Inc (NYSE:GTT), Steiner Leisure Ltd (NASDAQ:STNR), and Chesapeake Utilities Corporation (NYSE:CPK). This group of stocks’ market values resemble Calgon Carbon Corporation (NYSE:CCC)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRC 10 34926 1
GTT 12 133475 0
STNR 14 151530 4
CPK 10 39046 3

As you can see, these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $15 million in Calgon Carbon Corporation (NYSE:CCC)’s case. Steiner Leisure Ltd (NASDAQ:STNR) is the most popular stock in this table. On the other hand, Inland Real Estate Corporation (NYSE:IRC) is the least popular one with only 10 bullish hedge fund positions. Calgon Carbon Corporation (NYSE:CCC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Steiner Leisure Ltd (NASDAQ:STNR) might be a better candidate to consider a long position.

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