Is Meta Financial Group Inc. (NASDAQ:CASH) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Meta Financial Group Inc. (NASDAQ:CASH) a cheap investment now? Money managers are reducing their bets on the stock. The number of long hedge fund positions fell by 2 in recent months. Our calculations also showed that CASH 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 new hedge fund action encompassing Meta Financial Group Inc. (NASDAQ:CASH).
How have hedgies been trading Meta Financial Group Inc. (NASDAQ:CASH)?
At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in CASH a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Meta Financial Group Inc. (NASDAQ:CASH) was held by Nantahala Capital Management, which reported holding $34.6 million worth of stock at the end of December. It was followed by Second Curve Capital with a $9.8 million position. Other investors bullish on the company included Hawk Ridge Management, Harvest Capital Strategies, and Winton Capital Management.
Seeing as Meta Financial Group Inc. (NASDAQ:CASH) has experienced falling interest from hedge fund managers, it's safe to say that there is a sect of hedgies that slashed their full holdings in the third quarter. At the top of the heap, Richard Driehaus's Driehaus Capital said goodbye to the biggest position of the 700 funds followed by Insider Monkey, worth about $6.2 million in stock, and Malcolm Fairbairn's Ascend Capital was right behind this move, as the fund dropped about $4.7 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to Meta Financial Group Inc. (NASDAQ:CASH). These stocks are CBTX, Inc. (NASDAQ:CBTX), Urstadt Biddle Properties Inc (NYSE:UBA), Extraction Oil & Gas, Inc. (NASDAQ:XOG), and NV5 Holdings Inc (NASDAQ:NVEE). This group of stocks' market valuations match CASH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBTX,8,25322,0 UBA,7,25975,-1 XOG,22,121852,2 NVEE,13,34100,0 Average,12.5,51812,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $69 million in CASH's case. Extraction Oil & Gas, Inc. (NASDAQ:XOG) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc (NYSE:UBA) is the least popular one with only 7 bullish hedge fund positions. Meta Financial Group Inc. (NASDAQ:CASH) 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 CASH wasn't nearly as popular as these 15 stock and hedge funds that were betting on CASH were disappointed as the stock returned 16.2% 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.