Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cadiz Inc (NASDAQ:CDZI).
Cadiz Inc (NASDAQ:CDZI) was in 5 hedge funds' portfolios at the end of September. CDZI has seen a decrease in hedge fund interest recently. There were 9 hedge funds in our database with CDZI holdings at the end of the previous quarter. Our calculations also showed that CDZI 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.
To the average investor there are a lot of signals investors use to evaluate publicly traded companies. A duo of the most useful signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite investment managers can outpace the broader indices by a solid amount (see the details here).
[caption id="attachment_221400" align="aligncenter" width="450"] Crispin Odey of Odey Asset Management Group[/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 as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's take a look at the latest hedge fund action regarding Cadiz Inc (NASDAQ:CDZI).
How are hedge funds trading Cadiz Inc (NASDAQ:CDZI)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -44% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CDZI over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Water Asset Management, managed by Matt Diserio and Disque Deane Jr., holds the largest position in Cadiz Inc (NASDAQ:CDZI). Water Asset Management has a $30.7 million position in the stock, comprising 47% of its 13F portfolio. Sitting at the No. 2 spot is Crispin Odey of Odey Asset Management Group, with a $9.1 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions comprise Alan S. Parsow's Elkhorn Partners, Paul Marshall and Ian Wace's Marshall Wace and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Water Asset Management allocated the biggest weight to Cadiz Inc (NASDAQ:CDZI), around 47.01% of its 13F portfolio. Elkhorn Partners is also relatively very bullish on the stock, earmarking 1.92 percent of its 13F equity portfolio to CDZI.
Because Cadiz Inc (NASDAQ:CDZI) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of hedge funds who sold off their full holdings last quarter. Intriguingly, Renaissance Technologies sold off the biggest position of the "upper crust" of funds watched by Insider Monkey, totaling an estimated $0.8 million in stock. Israel Englander's fund, Millennium Management, also dropped its stock, about $0.6 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Cadiz Inc (NASDAQ:CDZI) but similarly valued. These stocks are Harpoon Therapeutics, Inc. (NASDAQ:HARP), Peoples Financial Services Corp. (NASDAQ:PFIS), Southern Missouri Bancorp, Inc. (NASDAQ:SMBC), and MarineMax, Inc. (NYSE:HZO). This group of stocks' market values are similar to CDZI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HARP,8,69242,2 PFIS,1,3156,0 SMBC,3,18268,0 HZO,10,5073,3 Average,5.5,23935,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $44 million in CDZI's case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand Peoples Financial Services Corp. (NASDAQ:PFIS) is the least popular one with only 1 bullish hedge fund positions. Cadiz Inc (NASDAQ:CDZI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CDZI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CDZI investors were disappointed as the stock returned -8.2% during the first two months of the fourth quarter 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 in Q4.
Disclosure: None. This article was originally published at Insider Monkey.