In this article we will check out the progression of hedge fund sentiment towards Clarivate Analytics Plc (NYSE:CCC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Clarivate Analytics Plc (NYSE:CCC) a healthy stock for your portfolio? Prominent investors are getting less optimistic. The number of long hedge fund positions were trimmed by 17 lately. Our calculations also showed that CCC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_745223" align="aligncenter" width="400"] Daniel Sundheim of D1 Capital Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the latest hedge fund action encompassing Clarivate Analytics Plc (NYSE:CCC).
Hedge fund activity in Clarivate Analytics Plc (NYSE:CCC)
At Q1's end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CCC over the last 18 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, Select Equity Group was the largest shareholder of Clarivate Analytics Plc (NYSE:CCC), with a stake worth $315.2 million reported as of the end of September. Trailing Select Equity Group was Brahman Capital, which amassed a stake valued at $93.5 million. 40 North Management, JS Capital, and D1 Capital Partners 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 Antipodean Advisors allocated the biggest weight to Clarivate Analytics Plc (NYSE:CCC), around 24.42% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, earmarking 10.99 percent of its 13F equity portfolio to CCC.
Due to the fact that Clarivate Analytics Plc (NYSE:CCC) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there were a few hedgies who were dropping their full holdings last quarter. It's worth mentioning that Robert Henry Lynch's Aristeia Capital sold off the largest stake of the 750 funds monitored by Insider Monkey, comprising close to $28.6 million in stock, and Mitch Kuflik and Rob Sobel's Brahman Capital was right behind this move, as the fund dropped about $23.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 17 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Clarivate Analytics Plc (NYSE:CCC). These stocks are The Western Union Company (NYSE:WU), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Peloton Interactive, Inc. (NASDAQ:PTON), and Weibo Corp (NASDAQ:WB). This group of stocks' market valuations match CCC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WU,34,339513,5 MPWR,23,390299,-4 PTON,36,748425,6 WB,10,182637,-1 Average,25.75,415219,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $415 million. That figure was $818 million in CCC's case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand Weibo Corp (NASDAQ:WB) is the least popular one with only 10 bullish hedge fund positions. Clarivate Analytics Plc (NYSE:CCC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately CCC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CCC were disappointed as the stock returned 10.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.