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Were Hedge Funds Right About Flocking Into Core-Mark Holding Company, Inc. (CORE) ?

Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Core-Mark Holding Company, Inc. (NASDAQ:CORE) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that CORE isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most market participants, hedge funds are viewed as underperforming, old investment tools of the past. While there are greater than 8000 funds trading at the moment, Our experts choose to focus on the bigwigs of this group, about 750 funds. These hedge fund managers shepherd most of the hedge fund industry’s total asset base, and by monitoring their inimitable equity investments, Insider Monkey has formulated numerous investment strategies that have historically defeated the market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Chuck Royce

We’re going to take a look at the new hedge fund action regarding Core-Mark Holding Company, Inc. (NASDAQ:CORE).

What have hedge funds been doing with Core-Mark Holding Company, Inc. (NASDAQ:CORE)?

Heading into the first quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in CORE a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

CORE_apr2019

More specifically, Royce & Associates was the largest shareholder of Core-Mark Holding Company, Inc. (NASDAQ:CORE), with a stake worth $6.5 million reported as of the end of December. Trailing Royce & Associates was GLG Partners, which amassed a stake valued at $5.6 million. Millennium Management, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers were leading the bulls’ herd. HBK Investments, managed by David Costen Haley, created the most outsized position in Core-Mark Holding Company, Inc. (NASDAQ:CORE). HBK Investments had $1.1 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also initiated a $0.6 million position during the quarter. The other funds with brand new CORE positions are Matthew Hulsizer’s PEAK6 Capital Management and Hoon Kim’s Quantinno Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Core-Mark Holding Company, Inc. (NASDAQ:CORE) but similarly valued. We will take a look at Corporacion America Airports SA (NYSE:CAAP), Sun Hydraulics Corporation (NASDAQ:SNHY), Mr. Cooper Group Inc. (NASDAQ:COOP), and CSG Systems International, Inc. (NASDAQ:CSGS). All of these stocks’ market caps are similar to CORE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAAP 13 39053 -1
SNHY 3 80188 -5
COOP 28 419733 -3
CSGS 15 133495 1
Average 14.75 168117 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $168 million. That figure was $39 million in CORE’s case. Mr. Cooper Group Inc. (NASDAQ:COOP) is the most popular stock in this table. On the other hand Sun Hydraulics Corporation (NASDAQ:SNHY) is the least popular one with only 3 bullish hedge fund positions. Core-Mark Holding Company, Inc. (NASDAQ:CORE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on CORE as the stock returned 55.3% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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