Is Curtiss-Wright Corporation (CW) A Good Stock To Buy ?

Nina Todic

Mon, Oct 14, 2019, 6:58 PM

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Curtiss-Wright Corporation (NYSE:CW) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Curtiss-Wright Corporation (NYSE:CW) was in 19 hedge funds' portfolios at the end of June. CW investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. There were 21 hedge funds in our database with CW positions at the end of the previous quarter. Our calculations also showed that CW 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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the key hedge fund action regarding Curtiss-Wright Corporation (NYSE:CW).

How are hedge funds trading Curtiss-Wright Corporation (NYSE:CW)?

Heading into the third quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CW over the last 16 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Curtiss-Wright Corporation (NYSE:CW). AQR Capital Management has a $147 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by GAMCO Investors, managed by Mario Gabelli, which holds a $83.9 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Noam Gottesman's GLG Partners, Ken Griffin's Citadel Investment Group and D. E. Shaw's D E Shaw.

Since Curtiss-Wright Corporation (NYSE:CW) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of hedge funds that slashed their full holdings in the second quarter. It's worth mentioning that Andrew Feldstein and Stephen Siderow's Blue Mountain Capital cut the largest stake of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $5 million in stock, and Matthew Tewksbury's Stevens Capital Management was right behind this move, as the fund cut about $3.6 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds in the second quarter.

Let's go over hedge fund activity in other stocks similar to Curtiss-Wright Corporation (NYSE:CW). We will take a look at LG Display Co Ltd. (NYSE:LPL), Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI), Polaris Inc. (NYSE:PII), and BOK Financial Corporation (NASDAQ:BOKF). This group of stocks' market values match CW's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPL,3,11105,-3 OLLI,31,257964,9 PII,24,243800,8 BOKF,19,185832,3 Average,19.25,174675,4.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $443 million in CW's case. Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 3 bullish hedge fund positions. Curtiss-Wright Corporation (NYSE:CW) is not the least popular stock in this group but hedge fund interest is still below average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CW investors were disappointed as the stock returned 1.8% during the third quarter 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 (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019.