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Criteo SA (CRTO): Are Hedge Funds Right About This Stock?

Debasis Saha

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Criteo SA (NASDAQ:CRTO)? The smart money sentiment can provide an answer to this question.

Criteo SA (NASDAQ:CRTO) investors should pay attention to an increase in support from the world's most elite money managers lately. CRTO was in 12 hedge funds' portfolios at the end of September. There were 9 hedge funds in our database with CRTO positions at the end of the previous quarter. Our calculations also showed that CRTO 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.

5 Most Popular Stocks Among Hedge Funds

In today’s marketplace there are plenty of indicators stock market investors can use to size up stocks. Two of the most underrated indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outpace the S&P 500 by a healthy margin (see the details here).

[caption id="attachment_258236" align="alignnone" width="600"] Ken Griffin of Citadel Investment Group[/caption]

Ken Griffin

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. We're going to take a peek at the fresh hedge fund action surrounding Criteo SA (NASDAQ:CRTO).

What have hedge funds been doing with Criteo SA (NASDAQ:CRTO)?

At Q3's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2019. On the other hand, there were a total of 11 hedge funds with a bullish position in CRTO 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.

Is CRTO A Good Stock To Buy?

Among these funds, International Value Advisers held the most valuable stake in Criteo SA (NASDAQ:CRTO), which was worth $66.9 million at the end of the third quarter. On the second spot was Greenvale Capital which amassed $47.5 million worth of shares. Citadel Investment Group, Millennium Management, and Balyasny Asset Management were 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 Greenvale Capital allocated the biggest weight to Criteo SA (NASDAQ:CRTO), around 14.21% of its 13F portfolio. International Value Advisers is also relatively very bullish on the stock, earmarking 2.48 percent of its 13F equity portfolio to CRTO.

As industrywide interest jumped, specific money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Criteo SA (NASDAQ:CRTO). Balyasny Asset Management had $6.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $4 million investment in the stock during the quarter. The only other fund with a brand new CRTO position is Sander Gerber's Hudson Bay Capital Management.

Let's check out hedge fund activity in other stocks similar to Criteo SA (NASDAQ:CRTO). These stocks are Oxford Industries, Inc. (NYSE:OXM), Summit Hotel Properties Inc (NYSE:INN), Guess', Inc. (NYSE:GES), and Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). All of these stocks' market caps are closest to CRTO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OXM,14,75460,1 INN,15,31264,3 GES,17,84122,2 TRHC,10,58647,3 Average,14,62373,2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $170 million in CRTO's case. Guess', Inc. (NYSE:GES) is the most popular stock in this table. On the other hand Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is the least popular one with only 10 bullish hedge fund positions. Criteo SA (NASDAQ:CRTO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CRTO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CRTO investors were disappointed as the stock returned -4.5% during the first two months of the fourth quarter 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 in Q4.

Disclosure: None. This article was originally published at Insider Monkey.

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