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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Cambium Networks Corporation (NASDAQ:CMBM).
Is Cambium Networks Corporation (NASDAQ:CMBM) a buy here? Prominent investors were turning bullish. The number of long hedge fund bets advanced by 4 in recent months. Cambium Networks Corporation (NASDAQ:CMBM) was in 6 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. Our calculations also showed that CMBM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 2 hedge funds in our database with CMBM holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a multitude of signals investors employ to assess publicly traded companies. A duo of the most under-the-radar signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outperform the S&P 500 by a solid margin (see the details here).
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind let's take a look at the latest hedge fund action surrounding Cambium Networks Corporation (NASDAQ:CMBM).
What have hedge funds been doing with Cambium Networks Corporation (NASDAQ:CMBM)?
At third quarter's end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 200% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in CMBM 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 Cambium Networks Corporation (NASDAQ:CMBM) was held by Laurion Capital Management, which reported holding $1.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $1.2 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and Engineers Gate Manager. In terms of the portfolio weights assigned to each position Laurion Capital Management allocated the biggest weight to Cambium Networks Corporation (NASDAQ:CMBM), around 0.02% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CMBM.
Now, specific money managers have jumped into Cambium Networks Corporation (NASDAQ:CMBM) headfirst. Renaissance Technologies, created the most outsized position in Cambium Networks Corporation (NASDAQ:CMBM). Renaissance Technologies had $1.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $1 million position during the quarter. The other funds with brand new CMBM positions are John Overdeck and David Siegel's Two Sigma Advisors, Greg Eisner's Engineers Gate Manager, and Michael Gelband's ExodusPoint Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Cambium Networks Corporation (NASDAQ:CMBM) but similarly valued. We will take a look at Byline Bancorp, Inc. (NYSE:BY), McEwen Mining Inc (NYSE:MUX), Establishment Labs Holdings Inc. (NASDAQ:ESTA), QCR Holdings, Inc. (NASDAQ:QCRH), Avid Bioservices, Inc. (NASDAQ:CDMO), Napco Security Technologies Inc (NASDAQ:NSSC), and MannKind Corporation (NASDAQ:MNKD). This group of stocks' market values are closest to CMBM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BY,7,8582,-1 MUX,10,5331,1 ESTA,12,78833,1 QCRH,11,41965,0 CDMO,16,51583,1 NSSC,2,1228,-6 MNKD,7,5789,-6 Average,9.3,27616,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $5 million in CMBM's case. Avid Bioservices, Inc. (NASDAQ:CDMO) is the most popular stock in this table. On the other hand Napco Security Technologies Inc (NASDAQ:NSSC) is the least popular one with only 2 bullish hedge fund positions. Cambium Networks Corporation (NASDAQ:CMBM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CMBM is 39.6. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CMBM as the stock returned 59.8% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.