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CVD Equipment Corporation (CVV): Hedge Funds Are Snapping Up

·6 min read

In this article we will take a look at whether hedge funds think CVD Equipment Corporation (NASDAQ:CVV) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

CVD Equipment Corporation (NASDAQ:CVV) has seen an increase in support from the world's most elite money managers in recent months. CVD Equipment Corporation (NASDAQ:CVV) was in 3 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 4. There were 1 hedge funds in our database with CVV holdings at the end of December. Our calculations also showed that CVV isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Billionaire David Siegel's Top 10 Stock Picks
Billionaire David Siegel's Top 10 Stock Picks

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to view the key hedge fund action regarding CVD Equipment Corporation (NASDAQ:CVV).

Do Hedge Funds Think CVV Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in CVV a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in CVD Equipment Corporation (NASDAQ:CVV), worth close to $0.9 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to CVD Equipment Corporation (NASDAQ:CVV), around 0.0012% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.0001 percent of its 13F equity portfolio to CVV.

As industrywide interest jumped, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most outsized position in CVD Equipment Corporation (NASDAQ:CVV). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also initiated a $0 million position during the quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as CVD Equipment Corporation (NASDAQ:CVV) but similarly valued. These stocks are Mind Technology, Inc. (NASDAQ:MIND), Xiaobai Maimai Inc. (NASDAQ:HX), Lexaria Bioscience Corp. (NASDAQ:LEXX), Planet Green Holdings Corp. (NYSE:PLAG), Cypress Environmental Partners, L.P. (NYSE:CELP), Obalon Therapeutics, Inc. (NASDAQ:OBLN), and Forward Industries, Inc. (NASDAQ:FORD). This group of stocks' market caps match CVV's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MIND,3,5573,1 HX,2,677,1 LEXX,4,3305,4 PLAG,2,183,2 CELP,1,108,1 OBLN,3,3397,1 FORD,2,2618,1 Average,2.4,2266,1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in CVV's case. Lexaria Bioscience Corp. (NASDAQ:LEXX) is the most popular stock in this table. On the other hand Cypress Environmental Partners, L.P. (NYSE:CELP) is the least popular one with only 1 bullish hedge fund positions. CVD Equipment Corporation (NASDAQ:CVV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CVV is 62.8. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately CVV wasn't nearly as popular as these 5 stocks and hedge funds that were betting on CVV were disappointed as the stock returned -1.8% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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