The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Culp, Inc. (NYSE:CULP) based on those filings.
Culp, Inc. (NYSE:CULP) investors should pay attention to an increase in activity from the world's largest hedge funds lately. Our calculations also showed that CULP 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a peek at the new hedge fund action encompassing Culp, Inc. (NYSE:CULP).
What have hedge funds been doing with Culp, Inc. (NYSE:CULP)?
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CULP over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Culp, Inc. (NYSE:CULP), with a stake worth $6.1 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $0.6 million. Fairfax Financial Holdings, Invenomic Capital Management, and D E Shaw 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 Invenomic Capital Management allocated the biggest weight to Culp, Inc. (NYSE:CULP), around 0.33% of its 13F portfolio. Fairfax Financial Holdings is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to CULP.
Consequently, key money managers have been driving this bullishness. Invenomic Capital Management, managed by Ali Motamed, created the most valuable position in Culp, Inc. (NYSE:CULP). Invenomic Capital Management had $0.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $0.2 million position during the quarter. The following funds were also among the new CULP investors: Greg Eisner's Engineers Gate Manager and Ken Griffin's Citadel Investment Group.
Let's now review hedge fund activity in other stocks similar to Culp, Inc. (NYSE:CULP). These stocks are Blue Ridge Bankshares, Inc. (NYSE:BRBS), LiqTech International Inc (NYSE:LIQT), Phoenix New Media Ltd (NYSE:FENG), and Laredo Petroleum Inc (NYSE:LPI). All of these stocks' market caps are similar to CULP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRBS,1,988,0 LIQT,3,4588,-3 FENG,6,8742,1 LPI,7,5369,-6 Average,4.25,4922,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $9 million in CULP's case. Laredo Petroleum Inc (NYSE:LPI) is the most popular stock in this table. On the other hand Blue Ridge Bankshares, Inc. (NYSE:BRBS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Culp, Inc. (NYSE:CULP) is more popular among hedge funds. 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately CULP wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CULP were disappointed as the stock returned 9.1% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.