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 Cinemark Holdings, Inc. (NYSE:CNK) based on that data.
Cinemark Holdings, Inc. (NYSE:CNK) investors should be aware of an increase in activity from the world's largest hedge funds in recent months. Our calculations also showed that CNK 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_338410" align="aligncenter" width="400"] Jeffrey Bronchick of Cove Street Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the fresh hedge fund action regarding Cinemark Holdings, Inc. (NYSE:CNK).
How have hedgies been trading Cinemark Holdings, Inc. (NYSE:CNK)?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CNK over the last 18 quarters. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Cinemark Holdings, Inc. (NYSE:CNK), with a stake worth $51.1 million reported as of the end of September. Trailing Renaissance Technologies was Rivulet Capital, which amassed a stake valued at $50.9 million. SCGE Management, Arrowstreet Capital, and Citadel Investment Group 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 Rivulet Capital allocated the biggest weight to Cinemark Holdings, Inc. (NYSE:CNK), around 3.26% of its 13F portfolio. Cove Street Capital is also relatively very bullish on the stock, earmarking 1.19 percent of its 13F equity portfolio to CNK.
As aggregate interest increased, some big names have been driving this bullishness. Rivulet Capital, managed by Barry Lebovits and Joshua Kuntz, assembled the most valuable position in Cinemark Holdings, Inc. (NYSE:CNK). Rivulet Capital had $50.9 million invested in the company at the end of the quarter. Christopher Lyle's SCGE Management also made a $22.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Guy Shahar's DSAM Partners, Jeffrey Bronchick's Cove Street Capital, and Michael Rockefeller and KarláKroeker's Woodline Partners.
Let's now take a look at hedge fund activity in other stocks similar to Cinemark Holdings, Inc. (NYSE:CNK). We will take a look at BMC Stock Holdings, Inc. (NASDAQ:BMCH), Magellan Health Inc (NASDAQ:MGLN), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), and MicroStrategy Incorporated (NASDAQ:MSTR). This group of stocks' market values are similar to CNK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMCH,23,210249,-6 MGLN,15,234535,-4 LGND,27,242071,4 MSTR,18,63901,-7 Average,20.75,187689,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $191 million in CNK's case. Ligand Pharmaceuticals Inc. (NASDAQ:LGND) is the most popular stock in this table. On the other hand Magellan Health Inc (NASDAQ:MGLN) is the least popular one with only 15 bullish hedge fund positions. Cinemark Holdings, Inc. (NYSE:CNK) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on CNK as the stock returned 47.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.