In this article you are going to find out whether hedge funds think CVR Energy, Inc. (NYSE:CVI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
CVR Energy, Inc. (NYSE:CVI) has seen a decrease in hedge fund interest of late. Our calculations also showed that CVI isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
At the moment there are a lot of signals shareholders use to evaluate stocks. Some of the most innovative signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outclass the market by a solid margin (see the details here).
[caption id="attachment_25910" align="aligncenter" width="391"] Carl Icahn of Icahn Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's view the key hedge fund action regarding CVR Energy, Inc. (NYSE:CVI).
What have hedge funds been doing with CVR Energy, Inc. (NYSE:CVI)?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -39% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CVI over the last 18 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.
The largest stake in CVR Energy, Inc. (NYSE:CVI) was held by Icahn Capital LP, which reported holding $1176.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $45.7 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and Gotham Asset Management. In terms of the portfolio weights assigned to each position Icahn Capital LP allocated the biggest weight to CVR Energy, Inc. (NYSE:CVI), around 6.54% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, dishing out 0.38 percent of its 13F equity portfolio to CVI.
Judging by the fact that CVR Energy, Inc. (NYSE:CVI) has experienced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of funds that elected to cut their positions entirely last quarter. It's worth mentioning that Ken Griffin's Citadel Investment Group said goodbye to the largest position of all the hedgies monitored by Insider Monkey, worth an estimated $5.4 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund cut about $4.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 12 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to CVR Energy, Inc. (NYSE:CVI). These stocks are Federal Signal Corporation (NYSE:FSS), Ameris Bancorp (NASDAQ:ABCB), World Fuel Services Corporation (NYSE:INT), and New Fortress Energy LLC (NASDAQ:NFE). All of these stocks' market caps match CVI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSS,15,53758,-3 ABCB,13,78011,-3 INT,13,98040,-9 NFE,2,19235,1 Average,10.75,62261,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $1244 million in CVI's case. Federal Signal Corporation (NYSE:FSS) is the most popular stock in this table. On the other hand New Fortress Energy LLC (NASDAQ:NFE) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks CVR Energy, Inc. (NYSE:CVI) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.4% in 2020 through June 22nd but still managed to beat the market by 15.9 percentage points. Hedge funds were also right about betting on CVI as the stock returned 37% so far in Q2 (through June 22nd) 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.