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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Colfax Corporation (NYSE:CFX).
Is Colfax Corporation (NYSE:CFX) a buy, sell, or hold? The best stock pickers were getting more optimistic. The number of bullish hedge fund positions moved up by 13 in recent months. Colfax Corporation (NYSE:CFX) was in 49 hedge funds' portfolios at the end of March. The all time high for this statistic was 45. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CFX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In today’s marketplace there are a lot of methods shareholders can use to grade their holdings. A pair of the most useful methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top money managers can trounce their index-focused peers by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Steven Cohen of Point72 Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. With all of this in mind let's check out the key hedge fund action encompassing Colfax Corporation (NYSE:CFX).
Do Hedge Funds Think CFX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the fourth quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in CFX a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Colfax Corporation (NYSE:CFX) was held by Cardinal Capital, which reported holding $148.5 million worth of stock at the end of December. It was followed by Diamond Hill Capital with a $142.9 million position. Other investors bullish on the company included Southpoint Capital Advisors, Royce & Associates, and Islet Management. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Colfax Corporation (NYSE:CFX), around 3.64% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, dishing out 2.07 percent of its 13F equity portfolio to CFX.
As industrywide interest jumped, key money managers were breaking ground themselves. Interval Partners, managed by Gregg Moskowitz, initiated the most outsized position in Colfax Corporation (NYSE:CFX). Interval Partners had $14.8 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also initiated a $8.8 million position during the quarter. The following funds were also among the new CFX investors: Frank Fu's CaaS Capital, Steve Cohen's Point72 Asset Management, and Javier Velazquez's Albar Capital.
Let's also examine hedge fund activity in other stocks similar to Colfax Corporation (NYSE:CFX). These stocks are New York Community Bancorp, Inc. (NYSE:NYCB), MSA Safety Incorporated (NYSE:MSA), Medpace Holdings, Inc. (NASDAQ:MEDP), Integra Lifesciences Holdings Corp (NASDAQ:IART), Agora, Inc. (NASDAQ:API), Primerica, Inc. (NYSE:PRI), and HollyFrontier Corporation (NYSE:HFC). This group of stocks' market values match CFX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NYCB,25,329163,0 MSA,17,29716,4 MEDP,21,265560,-4 IART,13,96207,0 API,17,739743,3 PRI,20,498557,-11 HFC,20,157103,-14 Average,19,302293,-3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $302 million. That figure was $1009 million in CFX's case. New York Community Bancorp, Inc. (NYSE:NYCB) is the most popular stock in this table. On the other hand Integra Lifesciences Holdings Corp (NASDAQ:IART) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Colfax Corporation (NYSE:CFX) is more popular among hedge funds. Our overall hedge fund sentiment score for CFX 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately CFX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on CFX were disappointed as the stock returned -0.7% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.