The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Corelogic Inc (NYSE:CLGX) from the perspective of those elite funds.
Is Corelogic Inc (NYSE:CLGX) the right investment to pursue these days? The best stock pickers are in a bullish mood. The number of bullish hedge fund bets inched up by 6 in recent months. Our calculations also showed that CLGX isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the key hedge fund action surrounding Corelogic Inc (NYSE:CLGX).
How have hedgies been trading Corelogic Inc (NYSE:CLGX)?
Heading into the third quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CLGX over the last 16 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Corelogic Inc (NYSE:CLGX), which was worth $121.8 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $80.8 million worth of shares. Moreover, Renaissance Technologies, Echo Street Capital Management, and AQR Capital Management were also bullish on Corelogic Inc (NYSE:CLGX), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers were leading the bulls' herd. Sandler Capital Management, managed by Andrew Sandler, established the largest position in Corelogic Inc (NYSE:CLGX). Sandler Capital Management had $8.4 million invested in the company at the end of the quarter. Vikas Lunia's Lunia Capital also initiated a $7.7 million position during the quarter. The other funds with new positions in the stock are Anand Parekh's Alyeska Investment Group, Steve Cohen's Point72 Asset Management, and Hoon Kim's Quantinno Capital.
Let's now review hedge fund activity in other stocks similar to Corelogic Inc (NYSE:CLGX). We will take a look at Companhia Paranaense de Energia - COPEL (NYSE:ELP), KAR Auction Services Inc (NYSE:KAR), Hancock Whitney Corporation (NASDAQ:HWC), and Spirit Airlines Inc. (NYSE:SAVE). This group of stocks' market values are closest to CLGX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ELP,9,66595,-1 KAR,32,631830,-10 HWC,16,103609,1 SAVE,31,302404,-3 Average,22,276110,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $334 million in CLGX's case. KAR Auction Services Inc (NYSE:KAR) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia - COPEL (NYSE:ELP) is the least popular one with only 9 bullish hedge fund positions. Corelogic Inc (NYSE:CLGX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CLGX as the stock returned 10.6% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.