After several tireless days we have finished crunching the numbers from nearly 900 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 March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards City Holding Company (NASDAQ:CHCO).
Is City Holding Company (NASDAQ:CHCO) a healthy stock for your portfolio? The smart money was taking a pessimistic view. The number of bullish hedge fund positions were cut by 1 recently. City Holding Company (NASDAQ:CHCO) was in 5 hedge funds' portfolios at the end of March. The all time high for this statistic is 13. Our calculations also showed that CHCO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the 21st century investor’s toolkit there are numerous formulas shareholders have at their disposal to evaluate publicly traded companies. Two of the most under-the-radar formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top investment managers can trounce the market by a superb amount (see the details here). 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 .
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. Keeping this in mind we're going to take a gander at the fresh hedge fund action encompassing City Holding Company (NASDAQ:CHCO).
Do Hedge Funds Think CHCO Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the fourth quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in CHCO a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of City Holding Company (NASDAQ:CHCO), with a stake worth $11.4 million reported as of the end of March. Trailing Royce & Associates was Citadel Investment Group, which amassed a stake valued at $2.8 million. D E Shaw, AQR Capital Management, and Polaris Capital Management 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 Royce & Associates allocated the biggest weight to City Holding Company (NASDAQ:CHCO), around 0.08% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to CHCO.
Due to the fact that City Holding Company (NASDAQ:CHCO) has experienced a decline in interest from the smart money, it's safe to say that there was a specific group of fund managers that elected to cut their full holdings last quarter. It's worth mentioning that Israel Englander's Millennium Management said goodbye to the largest position of the 750 funds followed by Insider Monkey, valued at about $0.4 million in stock, and Paul Tudor Jones's Tudor Investment Corp was right behind this move, as the fund dropped about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as City Holding Company (NASDAQ:CHCO) but similarly valued. We will take a look at Home Point Capital Inc. (NASDAQ:HMPT), Tootsie Roll Industries, Inc. (NYSE:TR), Enova International Inc (NYSE:ENVA), Comstock Resources Inc (NYSE:CRK), NV5 Global Inc (NASDAQ:NVEE), StoneX Group Inc. (NASDAQ:SNEX), and CEVA, Inc. (NASDAQ:CEVA). This group of stocks' market values resemble CHCO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMPT,13,35611,13 TR,14,34793,0 ENVA,21,251127,1 CRK,14,75581,-8 NVEE,16,62776,6 SNEX,9,121498,-3 CEVA,12,16442,-5 Average,14.1,85404,0.6 [/table]
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $17 million in CHCO's case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand StoneX Group Inc. (NASDAQ:SNEX) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks City Holding Company (NASDAQ:CHCO) is even less popular than SNEX. Our overall hedge fund sentiment score for CHCO is 15.5. 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. Hedge funds dodged a bullet by taking a bearish stance towards CHCO. 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 CHCO wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); CHCO investors were disappointed as the stock returned -8.3% 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.
