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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 Cimpress plc (NASDAQ:CMPR) and determine whether hedge funds skillfully traded this stock.
Cimpress plc (NASDAQ:CMPR) investors should be aware of an increase in support from the world's most elite money managers lately. CMPR was in 19 hedge funds' portfolios at the end of March. There were 18 hedge funds in our database with CMPR holdings at the end of the previous quarter. Our calculations also showed that CMPR 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.
In today’s marketplace there are dozens of methods stock traders use to value their holdings. A duo of the less utilized methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top fund managers can beat the broader indices by a healthy amount (see the details here).
Ric Dillon of Diamond Hill Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let's take a look at the key hedge fund action encompassing Cimpress plc (NASDAQ:CMPR).
What have hedge funds been doing with Cimpress plc (NASDAQ:CMPR)?
At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CMPR over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Spruce House Investment Management held the most valuable stake in Cimpress plc (NASDAQ:CMPR), which was worth $125.5 million at the end of the third quarter. On the second spot was Arlington Value Capital which amassed $85.3 million worth of shares. D E Shaw, Renaissance Technologies, and Bares Capital Management 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 Arlington Value Capital allocated the biggest weight to Cimpress plc (NASDAQ:CMPR), around 12.39% of its 13F portfolio. Spruce House Investment Management is also relatively very bullish on the stock, designating 7.92 percent of its 13F equity portfolio to CMPR.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Diamond Hill Capital, managed by Ric Dillon, initiated the most outsized position in Cimpress plc (NASDAQ:CMPR). Diamond Hill Capital had $5.5 million invested in the company at the end of the quarter. Ari Zweiman's 683 Capital Partners also initiated a $4.5 million position during the quarter. The following funds were also among the new CMPR investors: Greg Eisner's Engineers Gate Manager, Cliff Asness's AQR Capital Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's check out hedge fund activity in other stocks similar to Cimpress plc (NASDAQ:CMPR). These stocks are Ryder System, Inc. (NYSE:R), Mack Cali Realty Corp (NYSE:CLI), Meritage Homes Corp (NYSE:MTH), and Hilltop Holdings Inc. (NYSE:HTH). This group of stocks' market values are closest to CMPR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position R,18,157531,-5 CLI,10,73802,-5 MTH,22,155253,-7 HTH,15,58772,-4 Average,16.25,111340,-5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $111 million. That figure was $270 million in CMPR's case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Mack Cali Realty Corp (NYSE:CLI) is the least popular one with only 10 bullish hedge fund positions. Cimpress plc (NASDAQ:CMPR) is not the most popular stock in this group but hedge fund interest is still above 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 18.6% in 2020 through July 27th but still beat the market by 17.1 percentage points. Hedge funds were also right about betting on CMPR as the stock returned 59.3% since Q1 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.