Is CPI Card Group Inc. (PMTS) Going To Burn These Hedge Funds ?
We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards CPI Card Group Inc. (NASDAQ:PMTS).
CPI Card Group Inc. (NASDAQ:PMTS) was in 3 hedge funds' portfolios at the end of the third quarter of 2019. PMTS investors should be aware of an increase in enthusiasm from smart money of late. There were 2 hedge funds in our database with PMTS holdings at the end of the previous quarter. Our calculations also showed that PMTS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of metrics stock traders have at their disposal to appraise stocks. A pair of the best metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outclass the market by a significant margin (see the details here).
[caption id="attachment_140292" align="aligncenter" width="424"]
Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now we're going to take a gander at the recent hedge fund action encompassing CPI Card Group Inc. (NASDAQ:PMTS).
What does smart money think about CPI Card Group Inc. (NASDAQ:PMTS)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in PMTS over the last 17 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of CPI Card Group Inc. (NASDAQ:PMTS), with a stake worth $0.3 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $0.2 million. Mariner Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mariner Investment Group allocated the biggest weight to CPI Card Group Inc. (NASDAQ:PMTS), around 0.18% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0003 percent of its 13F equity portfolio to PMTS.
As one would reasonably expect, key money managers were leading the bulls' herd. Mariner Investment Group, managed by William Michaelcheck, established the biggest position in CPI Card Group Inc. (NASDAQ:PMTS). Mariner Investment Group had $0.1 million invested in the company at the end of the quarter.
Let's now take a look at hedge fund activity in other stocks similar to CPI Card Group Inc. (NASDAQ:PMTS). These stocks are Fibrocell Science Inc (NASDAQ:FCSC), Support.com, Inc. (NASDAQ:SPRT), Manning & Napier Inc (NYSE:MN), and Sierra Oncology, Inc. (NASDAQ:SRRA). This group of stocks' market caps resemble PMTS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCSC,3,3554,0 SPRT,5,5604,1 MN,8,6162,1 SRRA,12,11329,0 Average,7,6662,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $1 million in PMTS's case. Sierra Oncology, Inc. (NASDAQ:SRRA) is the most popular stock in this table. On the other hand Fibrocell Science Inc (NASDAQ:FCSC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks CPI Card Group Inc. (NASDAQ:PMTS) is even less popular than FCSC. Hedge funds dodged a bullet by taking a bearish stance towards PMTS. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PMTS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PMTS investors were disappointed as the stock returned -53.3% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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