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Hedge Funds Are Betting On Care.com Inc (CRCM)

Abigail Fisher

How do we determine whether Care.com Inc (NYSE:CRCM) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Care.com Inc (NYSE:CRCM) was in 18 hedge funds' portfolios at the end of March. CRCM investors should pay attention to an increase in activity from the world's largest hedge funds lately. There were 17 hedge funds in our database with CRCM holdings at the end of the previous quarter. Our calculations also showed that CRCM isn't among the 30 most popular stocks among hedge funds.

At the moment there are plenty of tools investors employ to grade publicly traded companies. Two of the most underrated tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outclass the S&P 500 by a healthy margin (see the details here).

Jack Ripsteen Tim Ripsteen Potrero Capital

We're going to take a glance at the key hedge fund action surrounding Care.com Inc (NYSE:CRCM).

What does the smart money think about Care.com Inc (NYSE:CRCM)?

Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CRCM over the last 15 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

CRCM_june2019

Among these funds, Tenzing Global Investors held the most valuable stake in Care.com Inc (NYSE:CRCM), which was worth $48.4 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $40.1 million worth of shares. Moreover, Portolan Capital Management, Millennium Management, and AQR Capital Management were also bullish on Care.com Inc (NYSE:CRCM), allocating a large percentage of their portfolios to this stock.

Consequently, specific money managers have jumped into Care.com Inc (NYSE:CRCM) headfirst. Potrero Capital Research, managed by Jack Ripsteen, established the most valuable position in Care.com Inc (NYSE:CRCM). Potrero Capital Research had $1.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $1.2 million investment in the stock during the quarter. The only other fund with a brand new CRCM position is David Harding's Winton Capital Management.

Let's now review hedge fund activity in other stocks similar to Care.com Inc (NYSE:CRCM). We will take a look at Zumiez Inc. (NASDAQ:ZUMZ), New Media Investment Group Inc (NYSE:NEWM), Photronics, Inc. (NASDAQ:PLAB), and Kura Oncology, Inc. (NASDAQ:KURA). This group of stocks' market values resemble CRCM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZUMZ,13,33969,1 NEWM,17,48309,0 PLAB,13,67607,-3 KURA,17,207125,2 Average,15,89253,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $153 million in CRCM's case. New Media Investment Group Inc (NYSE:NEWM) is the most popular stock in this table. On the other hand Zumiez Inc. (NASDAQ:ZUMZ) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Care.com Inc (NYSE:CRCM) is more popular among hedge funds. 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. Unfortunately CRCM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CRCM were disappointed as the stock returned -26.6% during the same period 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 13 of these stocks already outperformed the market in Q2.

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

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