The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors' filings. In this article, we analyze how these elite funds and prominent investors traded Cavco Industries, Inc. (NASDAQ:CVCO) based on those filings.
Cavco Industries, Inc. (NASDAQ:CVCO) was in 22 hedge funds' portfolios at the end of December. CVCO has experienced an increase in enthusiasm from smart money of late. There were 19 hedge funds in our database with CVCO positions at the end of the previous quarter. Our calculations also showed that cvco isn't among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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.
We're going to go over the recent hedge fund action regarding Cavco Industries, Inc. (NASDAQ:CVCO).
Hedge fund activity in Cavco Industries, Inc. (NASDAQ:CVCO)
At Q4's end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in CVCO 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.
Among these funds, Renaissance Technologies held the most valuable stake in Cavco Industries, Inc. (NASDAQ:CVCO), which was worth $45.1 million at the end of the fourth quarter. On the second spot was GAMCO Investors which amassed $39.3 million worth of shares. Moreover, Broad Bay Capital, Tontine Asset Management, and Cannell Capital were also bullish on Cavco Industries, Inc. (NASDAQ:CVCO), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Broad Bay Capital, managed by Richard Scott Greeder, established the most valuable position in Cavco Industries, Inc. (NASDAQ:CVCO). Broad Bay Capital had $13 million invested in the company at the end of the quarter. J. Carlo Cannell's Cannell Capital also made a $7 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Fisher's Fisher Asset Management, Brandon Osten's Venator Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cavco Industries, Inc. (NASDAQ:CVCO) but similarly valued. These stocks are NMI Holdings Inc (NASDAQ:NMIH), TPG Specialty Lending Inc (NYSE:TSLX), McDermott International, Inc. (NYSE:MDR), and Kite Realty Group Trust (NYSE:KRG). All of these stocks' market caps are closest to CVCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NMIH,16,165096,4 TSLX,10,39083,0 MDR,23,163462,-1 KRG,7,25452,-6 Average,14,98273,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $143 million in CVCO's case. McDermott International, Inc. (NYSE:MDR) is the most popular stock in this table. On the other hand Kite Realty Group Trust (NYSE:KRG) is the least popular one with only 7 bullish hedge fund positions. Cavco Industries, Inc. (NASDAQ:CVCO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CVCO wasn't nearly as popular as these 15 stock and hedge funds that were betting on CVCO were disappointed as the stock returned -5.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.