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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Cemex SAB de CV (NYSE:CX).
Is CX a good stock to buy now? Money managers were becoming more confident. The number of bullish hedge fund positions inched up by 3 lately. Cemex SAB de CV (NYSE:CX) was in 16 hedge funds' portfolios at the end of September. The all time high for this statistic is 24. Our calculations also showed that CX 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Donald Sussman of Paloma Partners
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. Keeping this in mind let's check out the new hedge fund action encompassing Cemex SAB de CV (NYSE:CX).
Do Hedge Funds Think CX Is A Good Stock To Buy Now?
At the end of September, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CX over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Oaktree Capital Management, managed by Howard Marks, holds the number one position in Cemex SAB de CV (NYSE:CX). Oaktree Capital Management has a $91 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Electron Capital Partners, led by Jos Shaver, holding a $65.9 million position; 4.6% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism include Jeremy Hosking's Hosking Partners, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Richard Driehaus's Driehaus Capital. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Cemex SAB de CV (NYSE:CX), around 4.55% of its 13F portfolio. Oaktree Capital Management is also relatively very bullish on the stock, dishing out 1.98 percent of its 13F equity portfolio to CX.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Driehaus Capital, managed by Richard Driehaus, established the most outsized position in Cemex SAB de CV (NYSE:CX). Driehaus Capital had $19.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $5.5 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman's GLG Partners, Donald Sussman's Paloma Partners, and Dmitry Balyasny's Balyasny Asset Management.
Let's check out hedge fund activity in other stocks similar to Cemex SAB de CV (NYSE:CX). These stocks are FirstService Corporation (NASDAQ:FSV), BJ's Wholesale Club Holdings, Inc. (NYSE:BJ), InVitae Corporation (NYSE:NVTA), Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), Huntington Ingalls Industries Inc (NYSE:HII), Vertiv Holdings Co (NYSE:VRT), and Healthcare Trust Of America Inc (NYSE:HTA). This group of stocks' market caps are closest to CX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSV,12,218348,1 BJ,31,259627,0 NVTA,24,1221576,8 OLLI,34,227297,10 HII,29,321301,-1 VRT,51,970203,11 HTA,19,100300,3 Average,28.6,474093,4.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $283 million in CX's case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand FirstService Corporation (NASDAQ:FSV) is the least popular one with only 12 bullish hedge fund positions. Cemex SAB de CV (NYSE:CX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CX is 33.1. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on CX as the stock returned 37.9% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.