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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Crown Crafts, Inc. (NASDAQ:CRWS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Crown Crafts (CRWS) a good stock to buy now? Hedge fund interest in Crown Crafts, Inc. (NASDAQ:CRWS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CRWS 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as VAALCO Energy, Inc. (NYSE:EGY), AstroNova, Inc. (NASDAQ:ALOT), and Proteostasis Therapeutics, Inc. (NASDAQ:PTI) to gather more data points.
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.
Joe Huber of Huber Capital Management
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 view the recent hedge fund action surrounding Crown Crafts, Inc. (NASDAQ:CRWS).
What does smart money think about Crown Crafts, Inc. (NASDAQ:CRWS)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CRWS over the last 21 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Crown Crafts, Inc. (NASDAQ:CRWS) was held by Rutabaga Capital Management, which reported holding $4.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $2.6 million position. Other investors bullish on the company included Huber Capital Management, Skylands Capital, and Royce & Associates. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Crown Crafts, Inc. (NASDAQ:CRWS), around 2.44% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, dishing out 0.28 percent of its 13F equity portfolio to CRWS.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Manatuck Hill Partners. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Skylands Capital).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Crown Crafts, Inc. (NASDAQ:CRWS) but similarly valued. We will take a look at VAALCO Energy, Inc. (NYSE:EGY), AstroNova, Inc. (NASDAQ:ALOT), Proteostasis Therapeutics, Inc. (NASDAQ:PTI), Fauquier Bankshares, Inc. (NASDAQ:FBSS), Smart Sand, Inc. (NASDAQ:SND), Digital Ally, Inc. (NASDAQ:DGLY), and Canterbury Park Holding Corporation (NASDAQ:CPHC). This group of stocks' market valuations resemble CRWS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGY,7,7824,0 ALOT,8,8719,-4 PTI,5,3545,-1 FBSS,2,5457,0 SND,5,2192,-3 DGLY,1,411,-2 CPHC,1,5301,0 Average,4.1,4778,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $9 million in CRWS's case. AstroNova, Inc. (NASDAQ:ALOT) is the most popular stock in this table. On the other hand Digital Ally, Inc. (NASDAQ:DGLY) is the least popular one with only 1 bullish hedge fund positions. Crown Crafts, Inc. (NASDAQ:CRWS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CRWS is 74.1. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on CRWS as the stock returned 38.2% since the end of Q3 (through 12/2) 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.