Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of CVD Equipment Corporation (NASDAQ:CVV) based on that data.
CVD Equipment Corporation (NASDAQ:CVV) has seen a decrease in support from the world's most elite money managers in recent months. CVV was in 3 hedge funds' portfolios at the end of March. There were 4 hedge funds in our database with CVV positions at the end of the previous quarter. Our calculations also showed that CVV 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.
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 44 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_267751" align="aligncenter" width="400"] Nelson Obus of Wynnefield Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a look at the recent hedge fund action encompassing CVD Equipment Corporation (NASDAQ:CVV).
Hedge fund activity in CVD Equipment Corporation (NASDAQ:CVV)
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in CVV over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in CVD Equipment Corporation (NASDAQ:CVV), which was worth $0.3 million at the end of the third quarter. On the second spot was Manatuck Hill Partners which amassed $0.3 million worth of shares. Wynnefield Capital was 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 Manatuck Hill Partners allocated the biggest weight to CVD Equipment Corporation (NASDAQ:CVV), around 0.25% of its 13F portfolio. Wynnefield Capital is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to CVV.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified CVV as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as CVD Equipment Corporation (NASDAQ:CVV) but similarly valued. We will take a look at AzurRx BioPharma, Inc. (NASDAQ:AZRX), ThermoGenesis Holdings, Inc. (NASDAQ:THMO), Liquid Media Group Ltd. (NASDAQ:YVR), and Bioline RX Ltd (NASDAQ:BLRX). All of these stocks' market caps match CVV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AZRX,3,31,2 THMO,1,501,0 YVR,2,148,1 BLRX,4,3116,0 Average,2.5,949,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in CVV's case. Bioline RX Ltd (NASDAQ:BLRX) is the most popular stock in this table. On the other hand ThermoGenesis Holdings, Inc. (NASDAQ:THMO) is the least popular one with only 1 bullish hedge fund positions. CVD Equipment Corporation (NASDAQ:CVV) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on CVV as the stock returned 27.7% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.