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Hedge Funds Have Never Been This Bullish On Cardtronics plc (CATM)

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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Cardtronics plc (NASDAQ:CATM) changed recently.

Cardtronics plc (NASDAQ:CATM) investors should be aware of an increase in activity from the world's largest hedge funds recently. Cardtronics plc (NASDAQ:CATM) was in 23 hedge funds' portfolios at the end of December. The all time high for this statistic was previously 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 15 hedge funds in our database with CATM positions at the end of the third quarter. Our calculations also showed that CATM isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 124 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.

best tech stocks to buy according to billionaire ken griffin
best tech stocks to buy according to billionaire ken griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we're going to analyze the new hedge fund action surrounding Cardtronics plc (NASDAQ:CATM).

Do Hedge Funds Think CATM Is A Good Stock To Buy Now?

At the end of December, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 53% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in CATM over the last 22 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.

More specifically, Hudson Executive Capital was the largest shareholder of Cardtronics plc (NASDAQ:CATM), with a stake worth $305.2 million reported as of the end of December. Trailing Hudson Executive Capital was Citadel Investment Group, which amassed a stake valued at $41.1 million. D E Shaw, Melqart Asset Management, and TIG Advisors 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 Hudson Executive Capital allocated the biggest weight to Cardtronics plc (NASDAQ:CATM), around 22.08% of its 13F portfolio. Athos Capital is also relatively very bullish on the stock, earmarking 2.6 percent of its 13F equity portfolio to CATM.

Now, key money managers have been driving this bullishness. Melqart Asset Management, managed by Michel Massoud, initiated the largest position in Cardtronics plc (NASDAQ:CATM). Melqart Asset Management had $13.7 million invested in the company at the end of the quarter. Carl Tiedemann and Michael Tiedemann's TIG Advisors also initiated a $9.6 million position during the quarter. The following funds were also among the new CATM investors: Matthew Moskey and Friedrich Schulte-Hillen's Athos Capital, John Bader's Halcyon Asset Management, and Orkun Kilic's Berry Street Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cardtronics plc (NASDAQ:CATM) but similarly valued. We will take a look at Tri Continental Corporation (NYSE:TY), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), Kaiser Aluminum Corp. (NASDAQ:KALU), Seabridge Gold, Inc. (NYSE:SA), The Bank of N.T. Butterfield & Son Limited (NYSE:NTB), Ocular Therapeutix Inc (NASDAQ:OCUL), and Clean Energy Fuels Corp (NASDAQ:CLNE). All of these stocks' market caps are similar to CATM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TY,2,627,0 ARI,18,48361,4 KALU,17,79335,1 SA,9,145886,-1 NTB,16,83308,1 OCUL,17,295379,5 CLNE,13,37863,2 Average,13.1,98680,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $449 million in CATM's case. Apollo Commercial Real Est. Finance Inc (NYSE:ARI) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Cardtronics plc (NASDAQ:CATM) is more popular among hedge funds. Our overall hedge fund sentiment score for CATM is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately CATM wasn't nearly as popular as these 30 stocks and hedge funds that were betting on CATM were disappointed as the stock returned 9.9% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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