After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Cosan Limited (NYSE:CZZ).
Is Cosan Limited (NYSE:CZZ) the right pick for your portfolio? Hedge funds are taking a pessimistic view. The number of long hedge fund positions decreased by 2 recently. Our calculations also showed that czz isn't among the 30 most popular stocks among hedge funds. CZZ was in 16 hedge funds' portfolios at the end of March. There were 18 hedge funds in our database with CZZ positions at the end of the previous quarter.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to check out the latest hedge fund action surrounding Cosan Limited (NYSE:CZZ).
How have hedgies been trading Cosan Limited (NYSE:CZZ)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in CZZ a year ago. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Cosan Limited (NYSE:CZZ), which was worth $78 million at the end of the first quarter. On the second spot was Arrowstreet Capital which amassed $28.2 million worth of shares. Moreover, Millennium Management, Moon Capital, and Two Sigma Advisors were also bullish on Cosan Limited (NYSE:CZZ), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Cosan Limited (NYSE:CZZ) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who sold off their full holdings heading into Q3. It's worth mentioning that Matthew Halbower's Pentwater Capital Management sold off the biggest stake of the 700 funds watched by Insider Monkey, valued at an estimated $3.1 million in stock. Parvinder Thiara's fund, Athanor Capital, also said goodbye to its stock, about $0.4 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds heading into Q3.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cosan Limited (NYSE:CZZ) but similarly valued. These stocks are Glaukos Corporation (NYSE:GKOS), Yelp Inc (NYSE:YELP), Navient Corp (NASDAQ:NAVI), and Guangshen Railway Company Limited (NYSE:GSH). This group of stocks' market valuations resemble CZZ's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GKOS,15,69093,4 YELP,33,568083,9 NAVI,31,470784,2 GSH,1,4185,0 Average,20,278036,3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $141 million in CZZ's case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Guangshen Railway Company Limited (NYSE:GSH) is the least popular one with only 1 bullish hedge fund positions. Cosan Limited (NYSE:CZZ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on CZZ as the stock returned 11.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.