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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was CompX International Inc. (NYSE:CIX).
CompX International Inc. (NYSE:CIX) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds' portfolios at the end of September. Our calculations also showed that CIX 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Perion Network Ltd (NASDAQ:PERI), Liquidia Technologies, Inc. (NASDAQ:LQDA), and Overseas Shipholding Group, Inc. (NYSE:OSG) to gather more data points.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Petry of Sessa 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 10 most profitable companies in the world 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. With all of this in mind we're going to go over the recent hedge fund action surrounding CompX International Inc. (NYSE:CIX).
What have hedge funds been doing with CompX International Inc. (NYSE:CIX)?
At third quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2020. By comparison, 4 hedge funds held shares or bullish call options in CIX 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.
When looking at the institutional investors followed by Insider Monkey, John Petry's Sessa Capital has the number one position in CompX International Inc. (NYSE:CIX), worth close to $5.4 million, accounting for 0.4% of its total 13F portfolio. On Sessa Capital's heels is Royce & Associates, led by Chuck Royce, holding a $3.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism include Renaissance Technologies, David P. Cohen's Minerva Advisors and . In terms of the portfolio weights assigned to each position Sessa Capital allocated the biggest weight to CompX International Inc. (NYSE:CIX), around 0.44% of its 13F portfolio. Minerva Advisors is also relatively very bullish on the stock, setting aside 0.39 percent of its 13F equity portfolio to CIX.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's also examine hedge fund activity in other stocks similar to CompX International Inc. (NYSE:CIX). These stocks are Perion Network Ltd (NASDAQ:PERI), Liquidia Technologies, Inc. (NASDAQ:LQDA), Overseas Shipholding Group, Inc. (NYSE:OSG), Flexsteel Industries, Inc. (NASDAQ:FLXS), Luna Innovations Incorporated (NASDAQ:LUNA), VOXX International Corp (NASDAQ:VOXX), and Ocwen Financial Corporation (NYSE:OCN). This group of stocks' market caps are similar to CIX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PERI,8,28654,3 LQDA,10,25209,-6 OSG,11,39199,-1 FLXS,9,40282,-4 LUNA,11,26088,1 VOXX,7,35232,1 OCN,8,35212,-9 Average,9.1,32839,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $12 million in CIX's case. Overseas Shipholding Group, Inc. (NYSE:OSG) is the most popular stock in this table. On the other hand VOXX International Corp (NASDAQ:VOXX) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks CompX International Inc. (NYSE:CIX) is even less popular than VOXX. Our overall hedge fund sentiment score for CIX is 35. 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 CIX. Our calculations showed that the top 20 most popular hedge fund stocks 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 November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately CIX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CIX investors were disappointed as the stock returned -6.6% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.