After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Century Communities, Inc (NYSE:CCS).
Is Century Communities, Inc (NYSE:CCS) an attractive investment now? Prominent investors are getting more bullish. The number of bullish hedge fund positions inched up by 1 in recent months. Our calculations also showed that CCS isn't among the 30 most popular stocks among hedge funds (see the video below). CCS was in 17 hedge funds' portfolios at the end of the second quarter of 2019. There were 16 hedge funds in our database with CCS positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the new hedge fund action surrounding Century Communities, Inc (NYSE:CCS).
How have hedgies been trading Century Communities, Inc (NYSE:CCS)?
At Q2's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CCS over the last 16 quarters. With the smart money's capital changing hands, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Oaktree Capital Management held the most valuable stake in Century Communities, Inc (NYSE:CCS), which was worth $48.3 million at the end of the second quarter. On the second spot was Basswood Capital which amassed $29.3 million worth of shares. Moreover, Buckingham Capital Management, Balyasny Asset Management, and Shoals Capital Management were also bullish on Century Communities, Inc (NYSE:CCS), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, initiated the biggest position in Century Communities, Inc (NYSE:CCS). Driehaus Capital had $4.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $2.7 million position during the quarter. The other funds with new positions in the stock are Peter Muller's PDT Partners, Israel Englander's Millennium Management, and Michael Gelband's ExodusPoint Capital.
Let's check out hedge fund activity in other stocks similar to Century Communities, Inc (NYSE:CCS). These stocks are German American Bancorp., Inc. (NASDAQ:GABC), Emerald Expositions Events, Inc. (NYSE:EEX), Golar LNG Partners LP (NASDAQ:GMLP), and Systemax Inc. (NYSE:SYX). This group of stocks' market caps resemble CCS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GABC,7,18041,1 EEX,7,4514,1 GMLP,6,36301,2 SYX,11,20269,-1 Average,7.75,19781,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $138 million in CCS's case. Systemax Inc. (NYSE:SYX) is the most popular stock in this table. On the other hand Golar LNG Partners LP (NASDAQ:GMLP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Century Communities, Inc (NYSE:CCS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CCS as the stock returned 15.2% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.