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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Cameco Corporation (NYSE:CCJ).
Is CCJ stock a buy? The best stock pickers were taking an optimistic view. The number of long hedge fund bets improved by 5 lately. Cameco Corporation (NYSE:CCJ) was in 25 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 28. Our calculations also showed that CCJ isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 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.
David Iben of Kopernik Global Investors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. With all of this in mind we're going to check out the new hedge fund action regarding Cameco Corporation (NYSE:CCJ).
Do Hedge Funds Think CCJ Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CCJ over the last 22 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Kopernik Global Investors was the largest shareholder of Cameco Corporation (NYSE:CCJ), with a stake worth $147.6 million reported as of the end of December. Trailing Kopernik Global Investors was Adage Capital Management, which amassed a stake valued at $49.4 million. Point State Capital, Renaissance Technologies, and Corriente Advisors 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 Kopernik Global Investors allocated the biggest weight to Cameco Corporation (NYSE:CCJ), around 20.38% of its 13F portfolio. Moerus Capital Management is also relatively very bullish on the stock, designating 8.71 percent of its 13F equity portfolio to CCJ.
Consequently, some big names have jumped into Cameco Corporation (NYSE:CCJ) headfirst. Point State Capital, managed by Zach Schreiber, established the biggest position in Cameco Corporation (NYSE:CCJ). Point State Capital had $39.8 million invested in the company at the end of the quarter. Mark Hart III's Corriente Advisors also initiated a $29.2 million position during the quarter. The following funds were also among the new CCJ investors: Scott Bessent's Key Square Capital Management, Mark Broach's Manatuck Hill Partners, and Steve Pattyn's Yaupon Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Cameco Corporation (NYSE:CCJ) but similarly valued. We will take a look at WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), MDU Resources Group Inc (NYSE:MDU), Ingredion Incorporated (NYSE:INGR), Marathon Oil Corporation (NYSE:MRO), Primerica, Inc. (NYSE:PRI), Iridium Communications Inc. (NASDAQ:IRDM), and Everbridge, Inc. (NASDAQ:EVBG). This group of stocks' market values are similar to CCJ's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSC,35,900160,-1 MDU,20,150898,-3 INGR,24,419950,1 MRO,26,317417,10 PRI,31,468219,-4 IRDM,18,431524,3 EVBG,36,1247361,6 Average,27.1,562218,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $562 million. That figure was $394 million in CCJ's case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Iridium Communications Inc. (NASDAQ:IRDM) is the least popular one with only 18 bullish hedge fund positions. Cameco Corporation (NYSE:CCJ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CCJ is 56.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on CCJ as the stock returned 21% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.