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We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like City Holding Company (NASDAQ:CHCO).
City Holding Company (NASDAQ:CHCO) has seen a decrease in activity from the world's largest hedge funds in recent months. CHCO was in 9 hedge funds' portfolios at the end of the third quarter of 2019. There were 11 hedge funds in our database with CHCO holdings at the end of the previous quarter. Our calculations also showed that CHCO 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.
Today there are plenty of signals stock traders can use to appraise their holdings. A duo of the most innovative signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a superb margin (see the details here).
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Paul Tudor Jones of Tudor Investment Corp[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let's take a look at the recent hedge fund action regarding City Holding Company (NASDAQ:CHCO).
What have hedge funds been doing with City Holding Company (NASDAQ:CHCO)?
At Q3's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in CHCO a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in City Holding Company (NASDAQ:CHCO) was held by Royce & Associates, which reported holding $19.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $1.2 million position. Other investors bullish on the company included Winton Capital Management, Millennium Management, and Tudor Investment Corp. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to City Holding Company (NASDAQ:CHCO), around 0.18% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to CHCO.
Since City Holding Company (NASDAQ:CHCO) has witnessed falling interest from the aggregate hedge fund industry, it's safe to say that there exists a select few hedgies who sold off their full holdings in the third quarter. Interestingly, Benjamin A. Smith's Laurion Capital Management dumped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, comprising about $0.4 million in stock, and Matthew Hulsizer's PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as City Holding Company (NASDAQ:CHCO) but similarly valued. These stocks are NOW Inc (NYSE:DNOW), Methode Electronics Inc. (NYSE:MEI), Saul Centers Inc (NYSE:BFS), and Air Transport Services Group Inc. (NASDAQ:ATSG). This group of stocks' market caps are similar to CHCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DNOW,11,66317,0 MEI,11,108516,3 BFS,12,43790,3 ATSG,17,158207,2 Average,12.75,94208,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $25 million in CHCO's case. Air Transport Services Group Inc. (NASDAQ:ATSG) is the most popular stock in this table. On the other hand NOW Inc (NYSE:DNOW) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks City Holding Company (NASDAQ:CHCO) is even less popular than DNOW. Hedge funds dodged a bullet by taking a bearish stance towards CHCO. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CHCO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CHCO investors were disappointed as the stock returned 5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.