With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was CAI International Inc (NYSE:CAI).
Is CAI International Inc (NYSE:CAI) a buy, sell, or hold? Hedge funds are selling. The number of bullish hedge fund positions shrunk by 2 in recent months. Our calculations also showed that CAI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are seen as slow, old financial vehicles of the past. While there are more than 8000 funds trading at the moment, We hone in on the aristocrats of this club, about 750 funds. These money managers shepherd the majority of all hedge funds' total capital, and by following their finest stock picks, Insider Monkey has unsheathed many investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy outpaced 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_364880" align="aligncenter" width="499"] Nathaniel August of Mangrove Partners[/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 analyze the latest hedge fund action regarding CAI International Inc (NYSE:CAI).
What does smart money think about CAI International Inc (NYSE:CAI)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in CAI a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Peter S. Park's Park West Asset Management has the biggest position in CAI International Inc (NYSE:CAI), worth close to $34.3 million, accounting for 1.7% of its total 13F portfolio. On Park West Asset Management's heels is Mangrove Partners, managed by Nathaniel August, which holds a $24.1 million position; 2.9% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise Andrew Weiss's Weiss Asset Management, Bradley Louis Radoff's Fondren Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to CAI International Inc (NYSE:CAI), around 9.96% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, earmarking 2.93 percent of its 13F equity portfolio to CAI.
Due to the fact that CAI International Inc (NYSE:CAI) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of money managers that slashed their entire stakes by the end of the third quarter. It's worth mentioning that George McCabe's Portolan Capital Management sold off the biggest stake of the "upper crust" of funds watched by Insider Monkey, valued at about $3.7 million in stock, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors was right behind this move, as the fund dumped about $0.6 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to CAI International Inc (NYSE:CAI). We will take a look at Del Taco Restaurants Inc (NASDAQ:TACO), Bloom Energy Corporation (NYSE:BE), BioDelivery Sciences International, Inc. (NASDAQ:BDSI), and EVI Industries, Inc. (NYSE:EVI). This group of stocks' market valuations are closest to CAI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TACO,13,29666,1 BE,14,20615,3 BDSI,18,109364,2 EVI,2,34322,1 Average,11.75,48492,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $106 million in CAI's case. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is the most popular stock in this table. On the other hand EVI Industries, Inc. (NYSE:EVI) is the least popular one with only 2 bullish hedge fund positions. CAI International Inc (NYSE:CAI) 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 CAI as the stock returned 10.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.