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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Cass Information Systems (NASDAQ:CASS).
Cass Information Systems (NASDAQ:CASS) was in 5 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. CASS has seen a decrease in activity from the world's largest hedge funds in recent months. There were 9 hedge funds in our database with CASS holdings at the end of June. 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 for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a look at the recent hedge fund action surrounding Cass Information Systems (NASDAQ:CASS).
What does smart money think about Cass Information Systems (NASDAQ:CASS)?
At third quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -44% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CASS over the last 21 quarters. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Cass Information Systems (NASDAQ:CASS), which was worth $5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $4.5 million worth of shares. Winton Capital Management, Two Sigma Advisors, and AQR 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 Royce & Associates allocated the biggest weight to Cass Information Systems (NASDAQ:CASS), around 0.05% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to CASS.
Since Cass Information Systems (NASDAQ:CASS) has witnessed a decline in interest from the smart money, it's easy to see that there is a sect of funds that slashed their entire stakes by the end of the third quarter. At the top of the heap, Ken Griffin's Citadel Investment Group sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $1.3 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund said goodbye to about $1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cass Information Systems (NASDAQ:CASS) but similarly valued. We will take a look at Celldex Therapeutics, Inc. (NASDAQ:CLDX), Natus Medical Inc (NASDAQ:NTUS), Unitil Corporation (NYSE:UTL), Veeco Instruments Inc. (NASDAQ:VECO), National Presto Industries Inc. (NYSE:NPK), Gladstone Commercial Corporation (NASDAQ:GOOD), and Eagle Pharmaceuticals Inc (NASDAQ:EGRX). This group of stocks' market values resemble CASS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLDX,23,292439,1 NTUS,24,72772,1 UTL,11,44842,2 VECO,19,290411,-1 NPK,11,60130,3 GOOD,8,48516,1 EGRX,16,99485,0 Average,16,129799,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $12 million in CASS's case. Natus Medical Inc (NASDAQ:NTUS) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Cass Information Systems (NASDAQ:CASS) is even less popular than GOOD. Our overall hedge fund sentiment score for CASS is 14.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th but managed to beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CASS, though not to the same extent, as the stock returned 9% since the end of September (through November 27th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.