The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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 September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded CEVA, Inc. (NASDAQ:CEVA) based on those filings.
Is CEVA a good stock to buy now? The best stock pickers were taking a pessimistic view. The number of bullish hedge fund bets shrunk by 4 lately. CEVA, Inc. (NASDAQ:CEVA) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 17. Our calculations also showed that CEVA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 66 percentage points since March 2017 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Ken Griffin
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's take a gander at the latest hedge fund action regarding CEVA, Inc. (NASDAQ:CEVA).
Do Hedge Funds Think CEVA Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter of 2020. On the other hand, there were a total of 11 hedge funds with a bullish position in CEVA a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Is CEVA A Good Stock To Buy?
Among these funds, Noked Capital held the most valuable stake in CEVA, Inc. (NASDAQ:CEVA), which was worth $15.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $7.9 million worth of shares. Rima Senvest Management, Arrowstreet Capital, and Citadel Investment Group 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 Noked Capital allocated the biggest weight to CEVA, Inc. (NASDAQ:CEVA), around 10.27% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, earmarking 0.29 percent of its 13F equity portfolio to CEVA.
Since CEVA, Inc. (NASDAQ:CEVA) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there were a few fund managers who were dropping their entire stakes by the end of the third quarter. Interestingly, David Harding's Winton Capital Management dumped the biggest stake of the 750 funds followed by Insider Monkey, worth about $1.7 million in stock. Frank Slattery's fund, Symmetry Peak Management, also cut its stock, about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 4 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to CEVA, Inc. (NASDAQ:CEVA). We will take a look at Welbilt, Inc. (NYSE:WBT), OraSure Technologies, Inc. (NASDAQ:OSUR), Carpenter Technology Corporation (NYSE:CRS), Primoris Services Corp (NASDAQ:PRIM), Qiwi PLC (NASDAQ:QIWI), Dril-Quip, Inc. (NYSE:DRQ), and Abercrombie & Fitch Co. (NYSE:ANF). This group of stocks' market values resemble CEVA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WBT,24,160591,2 OSUR,19,170378,-2 CRS,16,45127,0 PRIM,21,76140,2 QIWI,9,48289,2 DRQ,14,60816,4 ANF,27,239985,-7 Average,18.6,114475,0.1 [/table]
As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $44 million in CEVA's case. Abercrombie & Fitch Co. (NYSE:ANF) is the most popular stock in this table. On the other hand Qiwi PLC (NASDAQ:QIWI) is the least popular one with only 9 bullish hedge fund positions. CEVA, Inc. (NASDAQ:CEVA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CEVA is 30.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately CEVA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CEVA investors were disappointed as the stock returned 4% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
