We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Cameco Corporation (NYSE:CCJ) and determine whether hedge funds skillfully traded this stock.
Cameco Corporation (NYSE:CCJ) investors should be aware of a decrease in hedge fund sentiment of late. Our calculations also showed that CCJ isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
To the average investor there are a multitude of signals stock market investors can use to analyze publicly traded companies. A couple of the most innovative signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top money managers can beat the S&P 500 by a superb margin (see the details here).
John Burbank of Passport Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like "the Starbucks of cannabis" to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let's check out the new hedge fund action encompassing Cameco Corporation (NYSE:CCJ).
What have hedge funds been doing with Cameco Corporation (NYSE:CCJ)?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in CCJ a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Kopernik Global Investors was the largest shareholder of Cameco Corporation (NYSE:CCJ), with a stake worth $86.9 million reported as of the end of September. Trailing Kopernik Global Investors was Adage Capital Management, which amassed a stake valued at $85.5 million. Moerus Capital Management, Yost Capital Management, and Citadel Investment Group 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 Kopernik Global Investors allocated the biggest weight to Cameco Corporation (NYSE:CCJ), around 18.51% of its 13F portfolio. Yost Capital Management is also relatively very bullish on the stock, dishing out 13.69 percent of its 13F equity portfolio to CCJ.
Seeing as Cameco Corporation (NYSE:CCJ) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there was a specific group of hedgies that decided to sell off their positions entirely last quarter. It's worth mentioning that David Rosen's Rubric Capital Management sold off the largest investment of all the hedgies watched by Insider Monkey, valued at close to $20.1 million in stock. Rob Citrone's fund, Discovery Capital Management, also said goodbye to its stock, about $11.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Cameco Corporation (NYSE:CCJ). These stocks are Pan American Silver Corp. (NASDAQ:PAAS), American States Water Co (NYSE:AWR), AerCap Holdings N.V. (NYSE:AER), and BOK Financial Corporation (NASDAQ:BOKF). This group of stocks' market caps are similar to CCJ's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAAS,30,341386,0 AWR,19,50907,-2 AER,32,616402,-4 BOKF,22,145009,7 Average,25.75,288426,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $268 million in CCJ's case. AerCap Holdings N.V. (NYSE:AER) is the most popular stock in this table. On the other hand American States Water Co (NYSE:AWR) is the least popular one with only 19 bullish hedge fund positions. Cameco Corporation (NYSE:CCJ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on CCJ as the stock returned 34.2% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.