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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Cimpress plc (NASDAQ:CMPR) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Cimpress plc (NASDAQ:CMPR) shareholders have witnessed an increase in hedge fund sentiment in recent months. Cimpress plc (NASDAQ:CMPR) was in 25 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CMPR 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
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 we're going to take a look at the key hedge fund action regarding Cimpress plc (NASDAQ:CMPR).
How are hedge funds trading Cimpress plc (NASDAQ:CMPR)?
At Q2's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in CMPR 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.
According to Insider Monkey's hedge fund database, Zachary Sternberg and Benjamin Stein's Spruce House Investment Management has the number one position in Cimpress plc (NASDAQ:CMPR), worth close to $180.1 million, amounting to 2.4% of its total 13F portfolio. On Spruce House Investment Management's heels is D. E. Shaw of D E Shaw, with a $14.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism comprise Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Ari Zweiman's 683 Capital Partners. In terms of the portfolio weights assigned to each position Phoenician Capital allocated the biggest weight to Cimpress plc (NASDAQ:CMPR), around 3.68% of its 13F portfolio. Spruce House Investment Management is also relatively very bullish on the stock, dishing out 2.41 percent of its 13F equity portfolio to CMPR.
As one would reasonably expect, specific money managers have jumped into Cimpress plc (NASDAQ:CMPR) headfirst. Point72 Asset Management, managed by Steve Cohen, initiated the biggest position in Cimpress plc (NASDAQ:CMPR). Point72 Asset Management had $6 million invested in the company at the end of the quarter. Kerr Neilson's Platinum Asset Management also made a $1.4 million investment in the stock during the quarter. The other funds with brand new CMPR positions are Michael Gelband's ExodusPoint Capital, Lee Ainslie's Maverick Capital, and Noam Gottesman's GLG Partners.
Let's now take a look at hedge fund activity in other stocks similar to Cimpress plc (NASDAQ:CMPR). We will take a look at Select Medical Holdings Corporation (NYSE:SEM), Yext, Inc. (NYSE:YEXT), National Storage Affiliates Trust (NYSE:NSA), Golub Capital BDC Inc (NASDAQ:GBDC), Akebia Therapeutics Inc (NASDAQ:AKBA), American National Group, Inc. (NASDAQ:ANAT), and Wolverine World Wide, Inc. (NYSE:WWW). This group of stocks' market caps are similar to CMPR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEM,22,93345,4 YEXT,10,31408,1 NSA,13,54586,-5 GBDC,16,42799,3 AKBA,25,618091,7 ANAT,10,36359,-4 WWW,17,75033,-5 Average,16.1,135946,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $270 million in CMPR's case. Akebia Therapeutics Inc (NASDAQ:AKBA) is the most popular stock in this table. On the other hand Yext, Inc. (NYSE:YEXT) is the least popular one with only 10 bullish hedge fund positions. Cimpress plc (NASDAQ:CMPR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMPR is 90. 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 positive signal but 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 beat the market by 17.7 percentage points. Unfortunately CMPR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CMPR were disappointed as the stock returned -5.3% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.