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Did Hedge Funds Drop The Ball On Cable One Inc (CABO) ?

Nina Todic

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Cable One Inc (NYSE:CABO).

Is Cable One Inc (NYSE:CABO) a buy, sell, or hold? Investors who are in the know are getting more optimistic. The number of bullish hedge fund bets went up by 3 lately. Our calculations also showed that cabo isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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Let's review the latest hedge fund action regarding Cable One Inc (NYSE:CABO).

What does the smart money think about Cable One Inc (NYSE:CABO)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CABO over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CABO Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the largest position in Cable One Inc (NYSE:CABO). Renaissance Technologies has a $252.1 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Lou Simpson of SQ Advisors, with a $151.7 million position; the fund has 11.5% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish consist of Scott Wallace's Wallace Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Ken Griffin's Citadel Investment Group.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Cable One Inc (NYSE:CABO). Arrowstreet Capital had $19.3 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also made a $1.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Jeffrey Talpins's Element Capital Management, and George Zweig, Shane Haas and Ravi Chander's Signition LP.

Let's also examine hedge fund activity in other stocks similar to Cable One Inc (NYSE:CABO). These stocks are Affiliated Managers Group, Inc. (NYSE:AMG), Gardner Denver Holdings, Inc. (NYSE:GDI), Coupa Software Incorporated (NASDAQ:COUP), and Pilgrim's Pride Corporation (NASDAQ:PPC). This group of stocks' market values are closest to CABO's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMG,23,517004,-4 GDI,23,386157,-4 COUP,41,1385130,5 PPC,14,140859,-3 Average,25.25,607288,-1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $607 million. That figure was $525 million in CABO's case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Pilgrim's Pride Corporation (NASDAQ:PPC) is the least popular one with only 14 bullish hedge fund positions. Cable One Inc (NYSE:CABO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on CABO as the stock returned 15.2% during the same time frame and outperformed the market by an even larger margin.

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

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