While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Central European Media Enterprises Ltd. (NASDAQ:CETV).
Central European Media Enterprises Ltd. (NASDAQ:CETV) has seen an increase in support from the world's most elite money managers in recent months. Our calculations also showed that CETV isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to 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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_365194" align="alignnone" width="600"] David E. Shaw of D.E. Shaw[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to take a peek at the new hedge fund action surrounding Central European Media Enterprises Ltd. (NASDAQ:CETV).
What does smart money think about Central European Media Enterprises Ltd. (NASDAQ:CETV)?
At Q3's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CETV over the last 17 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, D E Shaw held the most valuable stake in Central European Media Enterprises Ltd. (NASDAQ:CETV), which was worth $5 million at the end of the third quarter. On the second spot was Marshall Wace which amassed $2.3 million worth of shares. Millennium Management, Renaissance Technologies, and Two Sigma 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 Zebra Capital Management allocated the biggest weight to Central European Media Enterprises Ltd. (NASDAQ:CETV), around 0.57% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to CETV.
As aggregate interest increased, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Central European Media Enterprises Ltd. (NASDAQ:CETV). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Thomas Bailard's Bailard Inc also initiated a $0.2 million position during the quarter. The following funds were also among the new CETV investors: Peter Algert and Kevin Coldiron's Algert Coldiron Investors and Andre F. Perold's HighVista Strategies.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Central European Media Enterprises Ltd. (NASDAQ:CETV) but similarly valued. These stocks are The Marcus Corporation (NYSE:MCS), Coeur d'Alene Mines Corporation (NYSE:CDE), AZZ Incorporated (NYSE:AZZ), and Radware Ltd. (NASDAQ:RDWR). This group of stocks' market values match CETV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MCS,10,47370,-4 CDE,14,51790,4 AZZ,15,45998,1 RDWR,15,309696,-1 Average,13.5,113714,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $13 million in CETV's case. AZZ Incorporated (NYSE:AZZ) is the most popular stock in this table. On the other hand The Marcus Corporation (NYSE:MCS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Central European Media Enterprises Ltd. (NASDAQ:CETV) is even less popular than MCS. Hedge funds dodged a bullet by taking a bearish stance towards CETV. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CETV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CETV investors were disappointed as the stock returned 0% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.