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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Cadiz Inc (NASDAQ:CDZI).
Cadiz Inc (NASDAQ:CDZI) has seen a decrease in hedge fund sentiment in recent months. CDZI was in 8 hedge funds' portfolios at the end of March. There were 11 hedge funds in our database with CDZI positions at the end of the previous quarter. Our calculations also showed that CDZI isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Crispin Odey of Odey Asset Management Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a peek at the fresh hedge fund action encompassing Cadiz Inc (NASDAQ:CDZI).
How are hedge funds trading Cadiz Inc (NASDAQ:CDZI)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in CDZI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Odey Asset Management Group, managed by Crispin Odey, holds the largest position in Cadiz Inc (NASDAQ:CDZI). Odey Asset Management Group has a $5.7 million position in the stock, comprising 0.9% of its 13F portfolio. Coming in second is Elkhorn Partners, led by Alan S. Parsow, holding a $3.7 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Israel Englander's Millennium Management, Paul Marshall and Ian Wace's Marshall Wace LLP and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Elkhorn Partners allocated the biggest weight to Cadiz Inc (NASDAQ:CDZI), around 3.09% of its 13F portfolio. Odey Asset Management Group is also relatively very bullish on the stock, dishing out 0.95 percent of its 13F equity portfolio to CDZI.
Because Cadiz Inc (NASDAQ:CDZI) has faced bearish sentiment from the smart money, we can see that there exists a select few hedge funds who sold off their entire stakes in the first quarter. It's worth mentioning that Matt Diserio and Disque Deane Jr.'s Water Asset Management sold off the largest stake of the "upper crust" of funds followed by Insider Monkey, totaling close to $7.7 million in stock, and Brett Hendrickson's Nokomis Capital was right behind this move, as the fund said goodbye to about $6.8 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds in the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cadiz Inc (NASDAQ:CDZI) but similarly valued. We will take a look at Capstead Mortgage Corporation (NYSE:CMO), Sabine Royalty Trust (NYSE:SBR), nLIGHT, Inc. (NASDAQ:LASR), and Plantronics, Inc. (NYSE:PLT). All of these stocks' market caps are closest to CDZI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMO,12,47986,0 SBR,4,13210,-2 LASR,7,23474,1 PLT,6,14594,-5 Average,7.25,24816,-1.5 [/table]
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $14 million in CDZI's case. Capstead Mortgage Corporation (NYSE:CMO) is the most popular stock in this table. On the other hand Sabine Royalty Trust (NYSE:SBR) is the least popular one with only 4 bullish hedge fund positions. Cadiz Inc (NASDAQ:CDZI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately CDZI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CDZI were disappointed as the stock returned -7.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
