A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Cronos Group Inc. (NASDAQ:CRON).
Cronos Group Inc. (NASDAQ:CRON) has experienced an increase in support from the world's most elite money managers in recent months. Our calculations also showed that CRON 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.
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 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_365194" align="alignnone" width="600"] David E. Shaw of D.E. Shaw[/caption]
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 gander at the key hedge fund action regarding Cronos Group Inc. (NASDAQ:CRON).
Hedge fund activity in Cronos Group Inc. (NASDAQ:CRON)
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in CRON over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Chescapmanager LLC was the largest shareholder of Cronos Group Inc. (NASDAQ:CRON), with a stake worth $76.9 million reported as of the end of September. Trailing Chescapmanager LLC was D E Shaw, which amassed a stake valued at $4.6 million. Valinor Management, Two Sigma Advisors, and Sculptor Capital 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 Chescapmanager LLC allocated the biggest weight to Cronos Group Inc. (NASDAQ:CRON), around 10.93% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, dishing out 4.08 percent of its 13F equity portfolio to CRON.
As one would reasonably expect, specific money managers have been driving this bullishness. Valinor Management, managed by David Gallo, initiated the most outsized position in Cronos Group Inc. (NASDAQ:CRON). Valinor Management had $2.4 million invested in the company at the end of the quarter. James Thomas Berylson's Berylson Capital Partners also initiated a $1.6 million position during the quarter. The other funds with brand new CRON positions are Noam Gottesman's GLG Partners and Renaissance Technologies.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cronos Group Inc. (NASDAQ:CRON) but similarly valued. We will take a look at CenterState Banks Inc (NASDAQ:CSFL), Mercury General Corporation (NYSE:MCY), Sunstone Hotel Investors Inc (NYSE:SHO), and Appian Corporation (NASDAQ:APPN). This group of stocks' market valuations are similar to CRON's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSFL,12,83804,-3 MCY,20,200510,4 SHO,21,221672,0 APPN,17,474518,5 Average,17.5,245126,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $94 million in CRON's case. Sunstone Hotel Investors Inc (NYSE:SHO) is the most popular stock in this table. On the other hand CenterState Banks Inc (NASDAQ:CSFL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Cronos Group Inc. (NASDAQ:CRON) is even less popular than CSFL. Hedge funds dodged a bullet by taking a bearish stance towards CRON. 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 CRON wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CRON investors were disappointed as the stock returned -24.3% 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.