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Were Hedge Funds Right About Corecivic Inc. (CXW)?

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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Corecivic Inc. (NYSE:CXW) based on those filings.

Corecivic Inc. (NYSE:CXW) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that CXW isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Extreme Networks, Inc (NASDAQ:EXTR), QuinStreet Inc (NASDAQ:QNST), and iClick Interactive Asia Group Limited (NASDAQ:ICLK) to gather more data points.

According to most traders, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are over 8000 funds trading at present, Our researchers hone in on the leaders of this club, around 850 funds. These money managers manage bulk of the hedge fund industry's total capital, and by keeping track of their unrivaled investments, Insider Monkey has determined a number of investment strategies that have historically surpassed the market. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ian Wace Marshall Wace
Ian Wace Marshall Wace

Ian Wace of Marshall Wace

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind let's analyze the recent hedge fund action regarding Corecivic Inc. (NYSE:CXW).

Do Hedge Funds Think CXW Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in CXW 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.

Is CXW A Good Stock To Buy?
Is CXW A Good Stock To Buy?

More specifically, Mason Capital Management was the largest shareholder of Corecivic Inc. (NYSE:CXW), with a stake worth $34.2 million reported as of the end of March. Trailing Mason Capital Management was Citadel Investment Group, which amassed a stake valued at $15.5 million. Arrowstreet Capital, Scion Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mason Capital Management allocated the biggest weight to Corecivic Inc. (NYSE:CXW), around 7.79% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, setting aside 1.28 percent of its 13F equity portfolio to CXW.

Judging by the fact that Corecivic Inc. (NYSE:CXW) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few fund managers that decided to sell off their full holdings by the end of the first quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management sold off the largest investment of the 750 funds followed by Insider Monkey, worth an estimated $8.8 million in stock. Dan Rasmussen's fund, Verdad Advisers, also cut its stock, about $2.3 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Corecivic Inc. (NYSE:CXW) but similarly valued. These stocks are Extreme Networks, Inc (NASDAQ:EXTR), QuinStreet Inc (NASDAQ:QNST), iClick Interactive Asia Group Limited (NASDAQ:ICLK), Celestica Inc. (NYSE:CLS), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), Nkarta, Inc. (NASDAQ:NKTX), and Personalis, Inc. (NASDAQ:PSNL). This group of stocks' market valuations are closest to CXW's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXTR,25,182791,6 QNST,20,158803,4 ICLK,9,19971,1 CLS,13,134815,0 SNDX,33,486256,-4 NKTX,15,384765,1 PSNL,13,220652,-2 Average,18.3,226865,0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $96 million in CXW's case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand iClick Interactive Asia Group Limited (NASDAQ:ICLK) is the least popular one with only 9 bullish hedge fund positions. Corecivic Inc. (NYSE:CXW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CXW is 43.8. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately CXW wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CXW investors were disappointed as the stock returned 7.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.