Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren't very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. This year hedge funds' top 30 stock picks easily bested the broader market, at 6.7% compared to 2.6%, despite there being a few duds in there like Facebook (even their collective wisdom isn't perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Cavco Industries, Inc. (NASDAQ:CVCO) has experienced a decrease in hedge fund sentiment of late. CVCO was in 19 hedge funds' portfolios at the end of the third quarter of 2018. There were 20 hedge funds in our database with CVCO holdings at the end of the previous quarter. Our calculations also showed that cvco isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to check out the key hedge fund action regarding Cavco Industries, Inc. (NASDAQ:CVCO).
Hedge fund activity in Cavco Industries, Inc. (NASDAQ:CVCO)
Heading into the fourth quarter of 2018, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CVCO over the last 13 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Cavco Industries, Inc. (NASDAQ:CVCO), with a stake worth $81.4 million reported as of the end of September. Trailing Renaissance Technologies was GAMCO Investors, which amassed a stake valued at $76.9 million. Royce & Associates, Osterweis Capital Management, and SG Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Cavco Industries, Inc. (NASDAQ:CVCO) has faced falling interest from the smart money, it's safe to say that there was a specific group of money managers who were dropping their entire stakes by the end of the third quarter. At the top of the heap, Richard Driehaus's Driehaus Capital dumped the largest investment of the 700 funds tracked by Insider Monkey, valued at close to $3.4 million in stock. David Costen Haley's fund, HBK Investments, also dropped its stock, about $0.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cavco Industries, Inc. (NASDAQ:CVCO) but similarly valued. We will take a look at Glaukos Corporation (NYSE:GKOS), Monro, Inc. (NASDAQ:MNRO), Transportadora de Gas del Sur SA (NYSE:TGS), and Acadia Realty Trust (NYSE:AKR). This group of stocks' market caps are similar to CVCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GKOS,14,155052,5 MNRO,10,171029,-3 TGS,9,59002,2 AKR,9,130212,-2 Average,10.5,128824,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $207 million in CVCO's case. Glaukos Corporation (NYSE:GKOS) is the most popular stock in this table. On the other hand Transportadora de Gas del Sur SA (NYSE:TGS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Cavco Industries, Inc. (NASDAQ:CVCO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.