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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Casey's General Stores, Inc. (NASDAQ:CASY) makes for a good investment right now.
Is CASY a good stock to buy now? The smart money was turning less bullish. The number of long hedge fund bets fell by 2 recently. Casey's General Stores, Inc. (NASDAQ:CASY) was in 21 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 28. Our calculations also showed that CASY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 23 hedge funds in our database with CASY positions at the end of the second quarter.
Video: 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 a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
James Dinan of York Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to take a peek at the new hedge fund action encompassing Casey's General Stores, Inc. (NASDAQ:CASY).
Do Hedge Funds Think CASY Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in CASY a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Casey's General Stores, Inc. (NASDAQ:CASY), which was worth $30 million at the end of the third quarter. On the second spot was York Capital Management which amassed $21.6 million worth of shares. Rip Road Capital, Carlson Capital, and Citadel Investment Group 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 Rip Road Capital allocated the biggest weight to Casey's General Stores, Inc. (NASDAQ:CASY), around 5.29% of its 13F portfolio. York Capital Management is also relatively very bullish on the stock, earmarking 1.2 percent of its 13F equity portfolio to CASY.
Because Casey's General Stores, Inc. (NASDAQ:CASY) has experienced declining sentiment from hedge fund managers, it's easy to see that there is a sect of funds who sold off their full holdings by the end of the third quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the biggest investment of the 750 funds watched by Insider Monkey, totaling an estimated $6.5 million in stock. Marc Majzner's fund, Clearline Capital, also sold off its stock, about $4.3 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Casey's General Stores, Inc. (NASDAQ:CASY) but similarly valued. We will take a look at ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Tata Motors Limited (NYSE:TTM), Albertsons Companies, Inc. (NYSE:ACI), Lear Corporation (NYSE:LEA), JOYY Inc. (NASDAQ:YY), Reliance Steel & Aluminum Co. (NYSE:RS), and Interpublic Group of Companies Inc (NYSE:IPG). This group of stocks' market caps are closest to CASY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACAD,41,2412028,-3 TTM,10,34390,1 ACI,26,2159342,-4 LEA,44,975002,3 YY,31,536084,3 RS,30,267133,3 IPG,31,486054,9 Average,30.4,981433,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.4 hedge funds with bullish positions and the average amount invested in these stocks was $981 million. That figure was $133 million in CASY's case. Lear Corporation (NYSE:LEA) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 10 bullish hedge fund positions. Casey's General Stores, Inc. (NASDAQ:CASY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CASY is 41.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately CASY wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CASY investors were disappointed as the stock returned -2.4% since the end of September (through 12/14) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.