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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Cardtronics plc (NASDAQ:CATM) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is CATM a good stock to buy now? Prominent investors were reducing their bets on the stock. The number of long hedge fund bets retreated by 6 in recent months. Cardtronics plc (NASDAQ:CATM) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that CATM 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Peter Rathjens of Arrowstreet Capital
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 let's review the new hedge fund action surrounding Cardtronics plc (NASDAQ:CATM).
Do Hedge Funds Think CATM Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in CATM a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cardtronics plc (NASDAQ:CATM) was held by Hudson Executive Capital, which reported holding $171.2 million worth of stock at the end of September. It was followed by D E Shaw with a $19.8 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Hudson Executive Capital allocated the biggest weight to Cardtronics plc (NASDAQ:CATM), around 17.49% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.62 percent of its 13F equity portfolio to CATM.
Seeing as Cardtronics plc (NASDAQ:CATM) has witnessed a decline in interest from the smart money, it's easy to see that there lies a certain "tier" of hedge funds that slashed their positions entirely by the end of the third quarter. Interestingly, Spencer M. Waxman's Shannon River Fund Management dropped the biggest position of the 750 funds watched by Insider Monkey, totaling an estimated $9.7 million in stock, and Peter S. Park's Park West Asset Management was right behind this move, as the fund dropped about $7.3 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 6 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks similar to Cardtronics plc (NASDAQ:CATM). These stocks are Dynegy Inc. (NYSE:DYN), Denbury Inc. (NYSE:DEN), Warrior Met Coal Inc. (NYSE:HCC), CEVA, Inc. (NASDAQ:CEVA), Welbilt, Inc. (NYSE:WBT), OraSure Technologies, Inc. (NASDAQ:OSUR), and Carpenter Technology Corporation (NYSE:CRS). This group of stocks' market caps match CATM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DYN,23,219240,23 DEN,9,298169,9 HCC,26,199815,5 CEVA,12,44479,-4 WBT,24,160591,2 OSUR,19,170378,-2 CRS,16,45127,0 Average,18.4,162543,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $247 million in CATM's case. Warrior Met Coal Inc. (NYSE:HCC) is the most popular stock in this table. On the other hand Denbury Inc. (NYSE:DEN) is the least popular one with only 9 bullish hedge fund positions. Cardtronics plc (NASDAQ:CATM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CATM is 37.1. 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. 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 still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on CATM as the stock returned 80.2% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.