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 700 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 Computer Task Group, Inc. (NASDAQ:CTG) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Computer Task Group, Inc. (NASDAQ:CTG) going to take off soon? Investors who are in the know are selling. The number of long hedge fund positions retreated by 2 recently. Our calculations also showed that CTG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CTG was in 7 hedge funds' portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with CTG holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's view the fresh hedge fund action surrounding Computer Task Group, Inc. (NASDAQ:CTG).
Hedge fund activity in Computer Task Group, Inc. (NASDAQ:CTG)
At Q3's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in CTG a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Computer Task Group, Inc. (NASDAQ:CTG) was held by Minerva Advisors, which reported holding $6.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $5.1 million position. Other investors bullish on the company included Ancora Advisors, Arrowstreet Capital, and Royce & Associates. In terms of the portfolio weights assigned to each position Minerva Advisors allocated the biggest weight to Computer Task Group, Inc. (NASDAQ:CTG), around 3.4% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to CTG.
Due to the fact that Computer Task Group, Inc. (NASDAQ:CTG) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there exists a select few funds that elected to cut their positions entirely last quarter. At the top of the heap, Nick Thakore's Diametric Capital sold off the biggest position of the "upper crust" of funds monitored by Insider Monkey, worth close to $0.3 million in stock. Gavin Saitowitz and Cisco J. del Valle's fund, Springbok Capital, also dropped its stock, about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Computer Task Group, Inc. (NASDAQ:CTG) but similarly valued. We will take a look at CLPS Incorporation (NASDAQ:CLPS), Nicholas Financial, Inc. (NASDAQ:NICK), IEC Electronics Corp. (NYSE:IEC), and Strata Skin Sciences, Inc. (NASDAQ:SSKN). This group of stocks' market caps resemble CTG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLPS,2,1260,1 NICK,2,22051,0 IEC,3,6238,1 SSKN,4,15524,1 Average,2.75,11268,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.75 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $14 million in CTG's case. Strata Skin Sciences, Inc. (NASDAQ:SSKN) is the most popular stock in this table. On the other hand CLPS Incorporation (NASDAQ:CLPS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Computer Task Group, Inc. (NASDAQ:CTG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CTG as the stock returned 22% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.