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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Core Molding Technologies, Inc. (NYSE:CMT).
Hedge fund interest in Core Molding Technologies, Inc. (NYSE:CMT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CMT 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 Drive Shack Inc. (NYSE:DS), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), and Idera Pharmaceuticals Inc (NASDAQ:IDRA) to gather more data points. Video: 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 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 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.
Jeffrey Gendell of Tontine Asset Management
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. Keeping this in mind let's take a glance at the key hedge fund action regarding Core Molding Technologies, Inc. (NYSE:CMT).
Hedge fund activity in Core Molding Technologies, Inc. (NYSE:CMT)
Heading into the fourth quarter of 2020, 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. On the other hand, there were a total of 4 hedge funds with a bullish position in CMT a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Jim Simons (founder)'s Renaissance Technologies has the largest position in Core Molding Technologies, Inc. (NYSE:CMT), worth close to $5 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is GAMCO Investors, managed by Mario Gabelli, which holds a $4.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism consist of Jeffrey Gendell's Tontine Asset Management, Israel Englander's Millennium Management and . In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to Core Molding Technologies, Inc. (NYSE:CMT), around 0.43% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to CMT.
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 go over hedge fund activity in other stocks similar to Core Molding Technologies, Inc. (NYSE:CMT). We will take a look at Drive Shack Inc. (NYSE:DS), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), Idera Pharmaceuticals Inc (NASDAQ:IDRA), Rockwell Medical Inc (NASDAQ:RMTI), First Eagle Alternative Capital BDC, Inc. (NASDAQ:FCRD), Galmed Pharmaceuticals Ltd (NASDAQ:GLMD), and Armstrong Flooring, Inc. (NYSE:AFI). This group of stocks' market caps are similar to CMT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DS,7,1378,-2 ADES,7,13306,0 IDRA,7,12828,1 RMTI,4,4228,0 FCRD,6,9332,0 GLMD,7,15667,-1 AFI,12,23266,-3 Average,7.1,11429,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $12 million in CMT's case. Armstrong Flooring, Inc. (NYSE:AFI) is the most popular stock in this table. On the other hand Rockwell Medical Inc (NASDAQ:RMTI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Core Molding Technologies, Inc. (NYSE:CMT) is even less popular than RMTI. Our overall hedge fund sentiment score for CMT is 20. 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 clearly dropped the ball on CMT as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds 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 and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CMT as the stock returned 29.3% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.