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Hedge Funds Have Never Been This Bullish On Curtiss-Wright Corp. (CW)

Reymerlyn Martin
·6 mins read

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 second 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 5 years and analyze what the smart money thinks of Curtiss-Wright Corp. (NYSE:CW) based on that data and determine whether they were really smart about the stock.

Curtiss-Wright Corp. (NYSE:CW) has experienced an increase in enthusiasm from smart money of late. Curtiss-Wright Corp. (NYSE:CW) was in 26 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CW isn't among the 30 most popular stocks among hedge funds (click for Q2 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.

In the eyes of most shareholders, hedge funds are assumed to be unimportant, old financial tools of yesteryear. While there are greater than 8000 funds in operation today, We hone in on the aristocrats of this group, about 850 funds. These money managers control the lion's share of all hedge funds' total asset base, and by tracking their matchless investments, Insider Monkey has determined a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Phill Gross Adage Capital Phillip Gross
Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's take a gander at the recent hedge fund action regarding Curtiss-Wright Corp. (NYSE:CW).

What does smart money think about Curtiss-Wright Corp. (NYSE:CW)?

At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in CW a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Curtiss-Wright Corp. (NYSE:CW), which was worth $50.4 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $44.9 million worth of shares. Millennium Management, GAMCO Investors, 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 Jade Capital Advisors allocated the biggest weight to Curtiss-Wright Corp. (NYSE:CW), around 2.11% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, designating 1.44 percent of its 13F equity portfolio to CW.

Consequently, specific money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, created the most outsized position in Curtiss-Wright Corp. (NYSE:CW). Adage Capital Management had $5.3 million invested in the company at the end of the quarter. John D. Gillespie's Prospector Partners also made a $5.1 million investment in the stock during the quarter. The other funds with brand new CW positions are Greg Eisner's Engineers Gate Manager, Seth Cogswell's Running Oak Capital, and John Overdeck and David Siegel's Two Sigma Advisors.

Let's now take a look at hedge fund activity in other stocks similar to Curtiss-Wright Corp. (NYSE:CW). We will take a look at YETI Holdings, Inc. (NYSE:YETI), Flowserve Corporation (NYSE:FLS), Grocery Outlet Holding Corp. (NASDAQ:GO), Tempur Sealy International Inc. (NYSE:TPX), Dicks Sporting Goods Inc (NYSE:DKS), Ultrapar Participacoes SA (NYSE:UGP), and RLI Corp. (NYSE:RLI). This group of stocks' market caps resemble CW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YETI,22,155265,2 FLS,30,251403,1 GO,19,137772,2 TPX,46,1023259,8 DKS,40,493110,13 UGP,7,38733,2 RLI,20,160243,5 Average,26.3,322826,4.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $323 million. That figure was $258 million in CW's case. Tempur Sealy International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 7 bullish hedge fund positions. Curtiss-Wright Corp. (NYSE:CW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CW is 64.4. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately CW wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CW investors were disappointed as the stock returned 4.5% since Q2 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.

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Disclosure: None. This article was originally published at Insider Monkey.

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