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In this article we will check out the progression of hedge fund sentiment towards CURO Group Holdings Corp. (NYSE:CURO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is CURO a good stock to buy now? Prominent investors were buying. The number of long hedge fund bets went up by 1 in recent months. CURO Group Holdings Corp. (NYSE:CURO) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 18. Our calculations also showed that CURO 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). There were 11 hedge funds in our database with CURO positions at the end of the second quarter.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 let's take a gander at the new hedge fund action regarding CURO Group Holdings Corp. (NYSE:CURO).
Do Hedge Funds Think CURO Is A Good Stock To Buy Now?
At Q3's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in CURO 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael A. Price and Amos Meron's Empyrean Capital Partners has the number one position in CURO Group Holdings Corp. (NYSE:CURO), worth close to $14 million, corresponding to 0.6% of its total 13F portfolio. The second most bullish fund manager is Second Curve Capital, led by Tom Brown, holding a $3.8 million position; 14.7% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism comprise Matthew Barrett's Glendon Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Jonathan Kolatch's Redwood Capital Management. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to CURO Group Holdings Corp. (NYSE:CURO), around 14.7% of its 13F portfolio. Glendon Capital Management is also relatively very bullish on the stock, earmarking 0.62 percent of its 13F equity portfolio to CURO.
As one would reasonably expect, key hedge funds have jumped into CURO Group Holdings Corp. (NYSE:CURO) headfirst. Millennium Management, managed by Israel Englander, created the most outsized position in CURO Group Holdings Corp. (NYSE:CURO). Millennium Management had $0.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Cliff Asness's AQR Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as CURO Group Holdings Corp. (NYSE:CURO) but similarly valued. We will take a look at Cheetah Mobile Inc (NYSE:CMCM), MidWestOne Financial Group, Inc. (NASDAQ:MOFG), SCVX Corp. (NYSE:SCVX), Solaris Oilfield Infrastructure, Inc. (NYSE:SOI), Cassava Sciences, Inc. (NASDAQ:SAVA), DXP Enterprises Inc (NASDAQ:DXPE), and Funko, Inc. (NASDAQ:FNKO). This group of stocks' market valuations match CURO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMCM,4,4087,-1 MOFG,7,5296,-2 SCVX,17,80020,4 SOI,14,25193,-3 SAVA,8,8159,6 DXPE,10,29362,2 FNKO,8,17454,1 Average,9.7,24224,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.7 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $28 million in CURO's case. SCVX Corp. (NYSE:SCVX) is the most popular stock in this table. On the other hand Cheetah Mobile Inc (NYSE:CMCM) is the least popular one with only 4 bullish hedge fund positions. CURO Group Holdings Corp. (NYSE:CURO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CURO is 56.8. 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 CURO as the stock returned 20.9% 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.