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Cinemark Holdings, Inc. (CNK): Hedge Funds Taking Some Chips Off The Table

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In this article we are going to use hedge fund sentiment as a tool and determine whether Cinemark Holdings, Inc. (NYSE:CNK) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Cinemark Holdings, Inc. (NYSE:CNK) was in 26 hedge funds' portfolios at the end of September. The all time high for this statistic is 32. CNK investors should pay attention to a decrease in enthusiasm from smart money lately. There were 32 hedge funds in our database with CNK positions at the end of the second quarter. Our calculations also showed that CNK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to take a look at the key hedge fund action regarding Cinemark Holdings, Inc. (NYSE:CNK).

Bernard Horn of Polaris Capital Management

Do Hedge Funds Think CNK Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CNK over the last 25 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Polaris Capital Management held the most valuable stake in Cinemark Holdings, Inc. (NYSE:CNK), which was worth $74 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $37.4 million worth of shares. Two Sigma Advisors, Impala Asset Management, and Aequim Alternative Investments 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 Polaris Capital Management allocated the biggest weight to Cinemark Holdings, Inc. (NYSE:CNK), around 2.36% of its 13F portfolio. Impala Asset Management is also relatively very bullish on the stock, dishing out 1.71 percent of its 13F equity portfolio to CNK.

Judging by the fact that Cinemark Holdings, Inc. (NYSE:CNK) has experienced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there was a specific group of hedgies who sold off their positions entirely heading into Q4. At the top of the heap, D. E. Shaw's D E Shaw dumped the biggest stake of the 750 funds watched by Insider Monkey, worth an estimated $30 million in stock. Eli Cohen's fund, Crescent Park Management, also cut its stock, about $9.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 6 funds heading into Q4.

Let's go over hedge fund activity in other stocks similar to Cinemark Holdings, Inc. (NYSE:CNK). We will take a look at Custom Truck One Source Inc. (NYSE:CTOS), Brandywine Realty Trust (NYSE:BDN), Atai Life Sciences N.V. (NASDAQ:ATAI), Outset Medical, Inc. (NASDAQ:OM), Whiting Petroleum Corporation (NYSE:WLL), NovaGold Resources Inc. (NYSE:NG), and Corcept Therapeutics Incorporated (NASDAQ:CORT). All of these stocks' market caps are closest to CNK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTOS,14,64389,1 BDN,8,55564,1 ATAI,17,109036,-3 OM,18,602748,0 WLL,20,217104,-4 NG,16,247865,-2 CORT,15,219530,-1 Average,15.4,216605,-1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $271 million in CNK's case. Whiting Petroleum Corporation (NYSE:WLL) is the most popular stock in this table. On the other hand Brandywine Realty Trust (NYSE:BDN) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Cinemark Holdings, Inc. (NYSE:CNK) is more popular among hedge funds. Our overall hedge fund sentiment score for CNK is 73.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately CNK wasn't nearly as popular as these 5 stocks and hedge funds that were betting on CNK were disappointed as the stock returned -12% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.