A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Cambridge Bancorp (NASDAQ:CATC).
Is CATC a good stock to buy? Hedge fund interest in Cambridge Bancorp (NASDAQ:CATC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CATC 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 U.S. Xpress Enterprises, Inc. (NYSE:USX), Franklin Street Properties Corp. (NYSE:FSP), and Anika Therapeutics, Inc. (NASDAQ:ANIK) to gather more data points.
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 we're going to view the recent hedge fund action surrounding Cambridge Bancorp (NASDAQ:CATC).
Do Hedge Funds Think CATC Is A Good Stock To Buy Now?
At first quarter's end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. By comparison, 9 hedge funds held shares or bullish call options in CATC a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Polaris Capital Management, managed by Bernard Horn, holds the most valuable position in Cambridge Bancorp (NASDAQ:CATC). Polaris Capital Management has a $15.9 million position in the stock, comprising 0.5% of its 13F portfolio. On Polaris Capital Management's heels is Prospector Partners, led by John D. Gillespie, holding a $1.5 million position; 0.2% of its 13F portfolio is allocated to the company. Some other peers that hold long positions comprise Renaissance Technologies, Ken Griffin's Citadel Investment Group and Mario Gabelli's GAMCO Investors. In terms of the portfolio weights assigned to each position Polaris Capital Management allocated the biggest weight to Cambridge Bancorp (NASDAQ:CATC), around 0.52% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to CATC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Cambridge Bancorp (NASDAQ:CATC) but similarly valued. These stocks are U.S. Xpress Enterprises, Inc. (NYSE:USX), Franklin Street Properties Corp. (NYSE:FSP), Anika Therapeutics, Inc. (NASDAQ:ANIK), DBV Technologies SA (NASDAQ:DBVT), Perion Network Ltd (NASDAQ:PERI), IDT Corporation (NYSE:IDT), and Peapack-Gladstone Financial Corp (NASDAQ:PGC). This group of stocks' market values are similar to CATC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USX,10,15371,3 FSP,12,22872,-2 ANIK,14,56365,-2 DBVT,7,128332,0 PERI,13,131333,2 IDT,9,59012,0 PGC,13,54840,-4 Average,11.1,66875,-0.4 [/table]
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $20 million in CATC's case. Anika Therapeutics, Inc. (NASDAQ:ANIK) is the most popular stock in this table. On the other hand DBV Technologies SA (NASDAQ:DBVT) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Cambridge Bancorp (NASDAQ:CATC) is even less popular than DBVT. Our overall hedge fund sentiment score for CATC is 21.7. 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. Hedge funds dodged a bullet by taking a bearish stance towards CATC. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th but managed to beat the market again by 6.1 percentage points. Unfortunately CATC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); CATC investors were disappointed as the stock returned 4.2% since the end of the first quarter (through 6/18) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
