The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May and August as this time China pivoted and Trump put more pressure on China by increasing tariffs. Fourth quarter brought optimism to the markets and hedge funds' top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 37.4% through the end of November, vs. a gain of 27.5% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards Crown Crafts, Inc. (NASDAQ:CRWS), and what that likely means for the prospects of the company and its stock.
Is Crown Crafts, Inc. (NASDAQ:CRWS) the right pick for your portfolio? Prominent investors are getting more optimistic. The number of bullish hedge fund positions increased by 3 in recent months. Our calculations also showed that CRWS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CRWS was in 8 hedge funds' portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with CRWS positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are seen as unimportant, old investment tools of years past. While there are over 8000 funds in operation at the moment, Our experts look at the bigwigs of this club, approximately 750 funds. Most estimates calculate that this group of people direct bulk of the hedge fund industry's total asset base, and by keeping an eye on their inimitable investments, Insider Monkey has come up with many investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_193003" align="aligncenter" width="450"] Chuck Royce of Royce & Associates[/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. Let's take a look at the new hedge fund action encompassing Crown Crafts, Inc. (NASDAQ:CRWS).
How are hedge funds trading Crown Crafts, Inc. (NASDAQ:CRWS)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in CRWS a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Rutabaga Capital Management was the largest shareholder of Crown Crafts, Inc. (NASDAQ:CRWS), with a stake worth $3.2 million reported as of the end of September. Trailing Rutabaga Capital Management was Renaissance Technologies, which amassed a stake valued at $2 million. Royce & Associates, Skylands Capital, and Ariel Investments 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 Rutabaga Capital Management allocated the biggest weight to Crown Crafts, Inc. (NASDAQ:CRWS), around 1.14% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to CRWS.
Now, some big names were breaking ground themselves. Rutabaga Capital Management, managed by Peter Schliemann, created the most valuable position in Crown Crafts, Inc. (NASDAQ:CRWS). Rutabaga Capital Management had $3.2 million invested in the company at the end of the quarter. Mark Broach's Manatuck Hill Partners also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new CRWS position is Thomas Bailard's Bailard Inc.
Let's go over hedge fund activity in other stocks similar to Crown Crafts, Inc. (NASDAQ:CRWS). These stocks are Kentucky First Federal Bancorp (NASDAQ:KFFB), Manhattan Bridge Capital, Inc (NASDAQ:LOAN), Maiden Holdings, Ltd. (NASDAQ:MHLD), and Chaparral Energy, Inc. (NYSE:CHAP). All of these stocks' market caps match CRWS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KFFB,1,512,0 LOAN,1,1269,-1 MHLD,10,8469,1 CHAP,12,34343,0 Average,6,11148,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $7 million in CRWS's case. Chaparral Energy, Inc. (NYSE:CHAP) is the most popular stock in this table. On the other hand Kentucky First Federal Bancorp (NASDAQ:KFFB) is the least popular one with only 1 bullish hedge fund positions. Crown Crafts, Inc. (NASDAQ:CRWS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CRWS, though not to the same extent, as the stock returned 7.5% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.