Is CLMT Stock A Buy Here?
Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Calumet Specialty Products Partners, L.P (NASDAQ:CLMT)? The smart money sentiment can provide an answer to this question.
Is CLMT stock a buy here? Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) has seen an increase in support from the world's most elite money managers of late. Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 8. There were 3 hedge funds in our database with CLMT holdings at the end of December. Our calculations also showed that CLMT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. 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 homepage. Now we're going to take a look at the new hedge fund action regarding Calumet Specialty Products Partners, L.P (NASDAQ:CLMT).
Do Hedge Funds Think CLMT Is A Good Stock To Buy Now?
At first quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 2 hedge funds with a bullish position in CLMT a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Dorset Management, managed by David M. Knott, holds the biggest position in Calumet Specialty Products Partners, L.P (NASDAQ:CLMT). Dorset Management has a $17.4 million position in the stock, comprising 7.4% of its 13F portfolio. The second largest stake is held by Springhouse Capital Management, managed by Brian Gaines, which holds a $2.2 million position; 2.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish comprise Ken Griffin's Citadel Investment Group, and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Dorset Management allocated the biggest weight to Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), around 7.42% of its 13F portfolio. Springhouse Capital Management is also relatively very bullish on the stock, dishing out 2.17 percent of its 13F equity portfolio to CLMT.
Now, some big names have jumped into Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) headfirst. PEAK6 Capital Management, managed by Matthew Hulsizer, created the biggest call position in Calumet Specialty Products Partners, L.P (NASDAQ:CLMT). PEAK6 Capital Management had $0.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $0.1 million position during the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Calumet Specialty Products Partners, L.P (NASDAQ:CLMT). We will take a look at Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX), Financial Institutions, Inc. (NASDAQ:FISI), Mesa Air Group, Inc. (NASDAQ:MESA), McEwen Mining Inc (NYSE:MUX), Gamida Cell Ltd. (NASDAQ:GMDA), Akouos, Inc. (NASDAQ:AKUS), and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). All of these stocks' market caps resemble CLMT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPRX,13,75026,-3 FISI,11,26854,-2 MESA,20,69658,6 MUX,5,18635,-5 GMDA,14,73639,0 AKUS,9,94380,-2 SPPI,8,47544,-1 Average,11.4,57962,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $21 million in CLMT's case. Mesa Air Group, Inc. (NASDAQ:MESA) is the most popular stock in this table. On the other hand McEwen Mining Inc (NYSE:MUX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) is even less popular than MUX. Our overall hedge fund sentiment score for CLMT is 21. 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. Hedge funds dodged a bullet by taking a bearish stance towards CLMT. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately CLMT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); CLMT investors were disappointed as the stock returned 6.2% since the end of the first quarter (through 6/11) 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.
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