Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Cott Corporation (NYSE:COT) was in 28 hedge funds' portfolios at the end of December. COT investors should be aware of an increase in support from the world's most elite money managers of late. There were 25 hedge funds in our database with COT positions at the end of the previous quarter. Our calculations also showed that cot isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a glance at the key hedge fund action regarding Cott Corporation (NYSE:COT).
What have hedge funds been doing with Cott Corporation (NYSE:COT)?
Heading into the first quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in COT a year ago. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Nitorum Capital held the most valuable stake in Cott Corporation (NYSE:COT), which was worth $100.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $66.5 million worth of shares. Moreover, Point72 Asset Management, Levin Capital Strategies, and P2 Capital Partners were also bullish on Cott Corporation (NYSE:COT), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Maplelane Capital, managed by Leon Shaulov, assembled the most valuable position in Cott Corporation (NYSE:COT). Maplelane Capital had $16 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $11.5 million position during the quarter. The other funds with new positions in the stock are David MacKnight's One Fin Capital Management, Gregg Moskowitz's Interval Partners, and Mario Cibelli's Marathon Partners.
Let's check out hedge fund activity in other stocks similar to Cott Corporation (NYSE:COT). We will take a look at Quidel Corporation (NASDAQ:QDEL), Chesapeake Energy Corporation (NYSE:CHK), NxStage Medical, Inc. (NASDAQ:NXTM), and Trustmark Corp (NASDAQ:TRMK). This group of stocks' market valuations match COT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QDEL,16,94379,1 CHK,15,74956,-7 NXTM,28,569758,-4 TRMK,10,13053,-1 Average,17.25,188037,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $540 million in COT's case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 10 bullish hedge fund positions. Cott Corporation (NYSE:COT) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately COT wasn't nearly as popular as these 15 stock and hedge funds that were betting on COT were disappointed as the stock returned 6.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.