How do we determine whether Cray Inc. (NASDAQ:CRAY) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Cray Inc. (NASDAQ:CRAY) shareholders have witnessed an increase in support from the world's most elite money managers recently. Our calculations also showed that CRAY isn't among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 our short portfolio.
Let's take a gander at the key hedge fund action encompassing Cray Inc. (NASDAQ:CRAY).
How are hedge funds trading Cray Inc. (NASDAQ:CRAY)?
At Q1's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 36% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CRAY over the last 15 quarters. With hedgies' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Cray Inc. (NASDAQ:CRAY) was held by Royce & Associates, which reported holding $25.7 million worth of stock at the end of March. It was followed by ACK Asset Management with a $14.4 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Fairfax Financial Holdings.