A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Cass Information Systems (NASDAQ:CASS).
Cass Information Systems (NASDAQ:CASS) has seen a decrease in enthusiasm from smart money in recent months. CASS was in 9 hedge funds' portfolios at the end of the third quarter of 2019. There were 11 hedge funds in our database with CASS holdings at the end of the previous quarter. Our calculations also showed that CASS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_193003" align="aligncenter" width="600"] Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to review the fresh hedge fund action regarding Cass Information Systems (NASDAQ:CASS).
What have hedge funds been doing with Cass Information Systems (NASDAQ:CASS)?
Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CASS over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Cass Information Systems (NASDAQ:CASS), which was worth $5.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $4.3 million worth of shares. Royce & Associates, Winton Capital Management, and Two Sigma Advisors 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 Royce & Associates allocated the biggest weight to Cass Information Systems (NASDAQ:CASS), around 0.03% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to CASS.
Judging by the fact that Cass Information Systems (NASDAQ:CASS) has witnessed declining sentiment from hedge fund managers, it's easy to see that there were a few funds that elected to cut their full holdings in the third quarter. Intriguingly, Matthew Hulsizer's PEAK6 Capital Management dropped the largest investment of the 750 funds monitored by Insider Monkey, comprising about $0.4 million in stock, and David E. Shaw's D E Shaw was right behind this move, as the fund cut about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Cass Information Systems (NASDAQ:CASS) but similarly valued. These stocks are Horizon Bancorp (NASDAQ:HBNC), MBIA Inc. (NYSE:MBI), Pitney Bowes Inc. (NYSE:PBI), and Northern Oil & Gas, Inc. (NYSEAMERICAN:NOG). This group of stocks' market caps match CASS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HBNC,10,27758,-1 MBI,22,177777,4 PBI,19,73062,1 NOG,19,135625,0 Average,17.5,103556,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $18 million in CASS's case. MBIA Inc. (NYSE:MBI) is the most popular stock in this table. On the other hand Horizon Bancorp (NASDAQ:HBNC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Cass Information Systems (NASDAQ:CASS) is even less popular than HBNC. Hedge funds dodged a bullet by taking a bearish stance towards CASS. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CASS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CASS investors were disappointed as the stock returned 4.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.