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 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Cambridge Bancorp (NASDAQ:CATC).
Cambridge Bancorp (NASDAQ:CATC) was in 9 hedge funds' portfolios at the end of the first quarter of 2020. CATC has experienced an increase in activity from the world's largest hedge funds lately. There were 7 hedge funds in our database with CATC positions at the end of the previous quarter. Our calculations also showed that CATC 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.
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 58 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.
[caption id="attachment_746893" align="aligncenter" width="400"] Paul Marshall of Marshall Wace[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a gander at the fresh hedge fund action regarding Cambridge Bancorp (NASDAQ:CATC).
What does smart money think about Cambridge Bancorp (NASDAQ:CATC)?
At Q1's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in CATC a year ago. 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 Cambridge Bancorp (NASDAQ:CATC) was held by Polaris Capital Management, which reported holding $9 million worth of stock at the end of September. It was followed by Castine Capital Management with a $2.2 million position. Other investors bullish on the company included Renaissance Technologies, ZWEIG DIMENNA PARTNERS, and Prospector Partners. In terms of the portfolio weights assigned to each position Castine Capital Management allocated the biggest weight to Cambridge Bancorp (NASDAQ:CATC), around 1.21% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to CATC.
As industrywide interest jumped, key hedge funds have jumped into Cambridge Bancorp (NASDAQ:CATC) headfirst. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in Cambridge Bancorp (NASDAQ:CATC). Citadel Investment Group had $0.5 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $0.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Cambridge Bancorp (NASDAQ:CATC) but similarly valued. These stocks are Summit Financial Group, Inc. (NASDAQ:SMMF), Lannett Company, Inc. (NYSE:LCI), Fulcrum Therapeutics, Inc. (NASDAQ:FULC), and Trillium Therapeutics Inc. (NASDAQ:TRIL). All of these stocks' market caps are closest to CATC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SMMF,2,6045,-1 LCI,8,31303,-3 FULC,6,36215,-2 TRIL,25,122213,22 Average,10.25,48944,4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $16 million in CATC's case. Trillium Therapeutics Inc. (NASDAQ:TRIL) is the most popular stock in this table. On the other hand Summit Financial Group, Inc. (NASDAQ:SMMF) is the least popular one with only 2 bullish hedge fund positions. Cambridge Bancorp (NASDAQ:CATC) 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 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately CATC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CATC investors were disappointed as the stock returned 13.4% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.