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With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Community Trust Bancorp, Inc. (NASDAQ:CTBI).
Is Community Trust Bancorp, Inc. (NASDAQ:CTBI) going to take off soon? Investors who are in the know were getting more bullish. The number of long hedge fund positions moved up by 1 recently. Community Trust Bancorp, Inc. (NASDAQ:CTBI) was in 10 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 12. Our calculations also showed that CTBI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 9 hedge funds in our database with CTBI holdings at the end of March.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 79 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 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.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to take a peek at the latest hedge fund action surrounding Community Trust Bancorp, Inc. (NASDAQ:CTBI).
Do Hedge Funds Think CTBI Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CTBI over the last 24 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Community Trust Bancorp, Inc. (NASDAQ:CTBI), with a stake worth $6 million reported as of the end of June. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $3.1 million. Citadel Investment Group, Millennium Management, and D E Shaw 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 Winton Capital Management allocated the biggest weight to Community Trust Bancorp, Inc. (NASDAQ:CTBI), around 0.02% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CTBI.
There weren't any hedge funds initiating brand new positions in the stock during the second quarter.
Let's now take a look at hedge fund activity in other stocks similar to Community Trust Bancorp, Inc. (NASDAQ:CTBI). We will take a look at Vertex Energy Inc (NASDAQ:VTNR), Precision BioSciences, Inc. (NASDAQ:DTIL), American Software, Inc. (NASDAQ:AMSWA), Heritage-Crystal Clean, Inc. (NASDAQ:HCCI), CuriosityStream Inc. (NASDAQ:CURI), Absolute Software Corporation (NASDAQ:ABST), and ScanSource, Inc. (NASDAQ:SCSC). This group of stocks' market caps match CTBI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VTNR,13,69446,8 DTIL,13,29028,0 AMSWA,11,49662,5 HCCI,15,96951,5 CURI,6,7467,-4 ABST,11,127919,1 SCSC,10,56382,-1 Average,11.3,62408,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.3 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $16 million in CTBI's case. Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) is the most popular stock in this table. On the other hand CuriosityStream Inc. (NASDAQ:CURI) is the least popular one with only 6 bullish hedge fund positions. Community Trust Bancorp, Inc. (NASDAQ:CTBI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTBI is 53.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on CTBI as the stock returned 5.5% since the end of the second quarter (through 9/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.