While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, 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 CTS Corporation (NYSE:CTS).
CTS Corporation (NYSE:CTS) has seen an increase in support from the world's most elite money managers of late. CTS was in 12 hedge funds' portfolios at the end of December. There were 10 hedge funds in our database with CTS positions at the end of the previous quarter. Our calculations also showed that cts 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 take a gander at the key hedge fund action surrounding CTS Corporation (NYSE:CTS).
What have hedge funds been doing with CTS Corporation (NYSE:CTS)?
At Q4's end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards CTS over the last 14 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.
According to Insider Monkey's hedge fund database, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in CTS Corporation (NYSE:CTS). GAMCO Investors has a $57.4 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is Amy Minella of Cardinal Capital, with a $19.7 million position; 0.7% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions include Jim Simons's Renaissance Technologies, Ken Griffin's Citadel Investment Group and D. E. Shaw's D E Shaw.
Now, key money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, created the most valuable position in CTS Corporation (NYSE:CTS). D E Shaw had $1 million invested in the company at the end of the quarter. Michael Platt and William Reeves's BlueCrest Capital Mgmt. also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new CTS position is Minhua Zhang's Weld Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as CTS Corporation (NYSE:CTS) but similarly valued. We will take a look at Oil States International, Inc. (NYSE:OIS), Keane Group, Inc. (NYSE:FRAC), Trupanion Inc (NASDAQ:TRUP), and COMSCORE, Inc. (NASDAQ:SCOR). This group of stocks' market caps are closest to CTS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OIS,10,21733,-1 FRAC,26,441615,8 TRUP,10,130837,1 SCOR,12,190216,-1 Average,14.5,196100,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $86 million in CTS's case. Keane Group, Inc. (NYSE:FRAC) is the most popular stock in this table. On the other hand Oil States International, Inc. (NYSE:OIS) is the least popular one with only 10 bullish hedge fund positions. CTS Corporation (NYSE:CTS) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on CTS, though not to the same extent, as the stock returned 19.9% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.