After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Carriage Services, Inc. (NYSE:CSV).
Is CSV a good stock to buy now? Carriage Services, Inc. (NYSE:CSV) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. CSV has seen a decrease in hedge fund interest in recent months. There were 12 hedge funds in our database with CSV positions at the end of the second quarter. Our calculations also showed that CSV 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Overdeck of Two Sigma
John Overdeck of Two Sigma Advisors
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 we're going to take a look at the recent hedge fund action regarding Carriage Services, Inc. (NYSE:CSV).
Do Hedge Funds Think CSV Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in CSV a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Carriage Services, Inc. (NYSE:CSV), which was worth $25.2 million at the end of the third quarter. On the second spot was AREX Capital Management which amassed $5.5 million worth of shares. Two Sigma Advisors, 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 AREX Capital Management allocated the biggest weight to Carriage Services, Inc. (NYSE:CSV), around 3.55% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.04 percent of its 13F equity portfolio to CSV.
Due to the fact that Carriage Services, Inc. (NYSE:CSV) has faced a decline in interest from the smart money, we can see that there were a few fund managers that slashed their entire stakes by the end of the third quarter. It's worth mentioning that Greg Eisner's Engineers Gate Manager dropped the biggest investment of the "upper crust" of funds watched by Insider Monkey, comprising about $0.5 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dumped its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Carriage Services, Inc. (NYSE:CSV) but similarly valued. We will take a look at Voyager Therapeutics, Inc. (NASDAQ:VYGR), Jernigan Capital Inc (NYSE:JCAP), Prothena Corporation plc (NASDAQ:PRTA), Heritage Commerce Corp. (NASDAQ:HTBK), Donegal Group Inc (NASDAQ:DGICA), FRP Holdings Inc (NASDAQ:FRPH), and Sterling Construction Company, Inc. (NASDAQ:STRL). All of these stocks' market caps match CSV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VYGR,10,49897,-4 JCAP,9,27556,-3 PRTA,23,207482,-2 HTBK,12,16300,1 DGICA,7,11570,3 FRPH,9,31054,0 STRL,15,55160,0 Average,12.1,57003,-0.7 [/table]
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $40 million in CSV's case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Donegal Group Inc (NASDAQ:DGICA) is the least popular one with only 7 bullish hedge fund positions. Carriage Services, Inc. (NYSE:CSV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CSV is 44. 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. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CSV as the stock returned 31.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
