The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Fourth quarter brought optimism to the markets and hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 37.4% through the end of November, vs. a gain of 27.5% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Capital City Bank Group, Inc. (NASDAQ:CCBG), and what that likely means for the prospects of the company and its stock.
Hedge fund interest in Capital City Bank Group, Inc. (NASDAQ:CCBG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CCBG to other stocks including Sinovac Biotech Ltd. (NASDAQ:SVA), Stemline Therapeutics Inc (NASDAQ:STML), and Aurora Mobile Limited (NASDAQ:JG) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/caption]
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 as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's take a peek at the recent hedge fund action surrounding Capital City Bank Group, Inc. (NASDAQ:CCBG).
How are hedge funds trading Capital City Bank Group, Inc. (NASDAQ:CCBG)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 3 hedge funds with a bullish position in CCBG a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Capital City Bank Group, Inc. (NASDAQ:CCBG) was held by Renaissance Technologies, which reported holding $6.6 million worth of stock at the end of September. It was followed by Millennium Management with a $1.6 million position. The only other hedge fund that is bullish on the company was Royce & Associates.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Capital City Bank Group, Inc. (NASDAQ:CCBG) but similarly valued. We will take a look at Sinovac Biotech Ltd. (NASDAQ:SVA), Stemline Therapeutics Inc (NASDAQ:STML), Aurora Mobile Limited (NASDAQ:JG), and Landmark Infrastructure Partners LP (NASDAQ:LMRK). All of these stocks' market caps are similar to CCBG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SVA,3,70156,0 STML,18,161684,1 JG,1,77,0 LMRK,3,2471,-1 Average,6.25,58597,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $9 million in CCBG's case. Stemline Therapeutics Inc (NASDAQ:STML) is the most popular stock in this table. On the other hand Aurora Mobile Limited (NASDAQ:JG) is the least popular one with only 1 bullish hedge fund positions. Capital City Bank Group, Inc. (NASDAQ:CCBG) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CCBG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CCBG investors were disappointed as the stock returned 5.4% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.