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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Central Pacific Financial Corp. (NYSE:CPF) based on that data.
Is CPF a good stock to buy now? Central Pacific Financial Corp. (NYSE:CPF) was in 14 hedge funds' portfolios at the end of September. The all time high for this statistic is 18. CPF investors should pay attention to a decrease in hedge fund interest of late. There were 16 hedge funds in our database with CPF holdings at the end of June. Our calculations also showed that CPF 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).
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.
Bruce Kovner of Caxton Associates LP
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 15 best blue chip stocks 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. 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 website. Now we're going to take a look at the key hedge fund action surrounding Central Pacific Financial Corp. (NYSE:CPF).
Do Hedge Funds Think CPF Is A Good Stock To Buy Now?
At third quarter's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in CPF a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies, holds the biggest position in Central Pacific Financial Corp. (NYSE:CPF). Renaissance Technologies has a $16.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by D E Shaw, managed by D. E. Shaw, which holds a $6.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Noam Gottesman's GLG Partners and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Polaris Capital Management allocated the biggest weight to Central Pacific Financial Corp. (NYSE:CPF), around 0.03% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to CPF.
Due to the fact that Central Pacific Financial Corp. (NYSE:CPF) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of hedgies that elected to cut their full holdings last quarter. At the top of the heap, David Harding's Winton Capital Management cut the largest investment of the "upper crust" of funds watched by Insider Monkey, comprising close to $2.8 million in stock. Thomas Bailard's fund, Bailard Inc, also dumped its stock, about $0.4 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Central Pacific Financial Corp. (NYSE:CPF) but similarly valued. These stocks are CHP Merger Corp. (NASDAQ:CHPM), Pzena Investment Management Inc (NYSE:PZN), Co-Diagnostics, Inc. (NASDAQ:CODX), Peoples Bancorp Inc. (NASDAQ:PEBO), Heidrick & Struggles International, Inc. (NASDAQ:HSII), Donegal Group, Inc. (NASDAQ:DGICB), and Altabancorp (NASDAQ:ALTA). This group of stocks' market valuations match CPF's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHPM,16,100935,16 PZN,4,5821,-2 CODX,5,3221,1 PEBO,7,9510,-2 HSII,14,76146,-2 DGICB,1,216,0 ALTA,5,15512,1 Average,7.4,30194,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.4 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $42 million in CPF's case. CHP Merger Corp. (NASDAQ:CHPM) is the most popular stock in this table. On the other hand Donegal Group, Inc. (NASDAQ:DGICB) is the least popular one with only 1 bullish hedge fund positions. Central Pacific Financial Corp. (NYSE:CPF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPF is 69.7. 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. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CPF as the stock returned 30.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.