As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Camping World Holdings, Inc. (NYSE:CWH).
Camping World Holdings, Inc. (NYSE:CWH) a buy right now? The best stock pickers were getting less optimistic. The number of bullish hedge fund positions went down by 4 recently. Camping World Holdings, Inc. (NYSE:CWH) was in 20 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that CWH isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 24 hedge funds in our database with CWH positions at the end of the first quarter.
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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Jeffrey Gendell of Tontine Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this
emerging lithium stock. We go through lists like the 10 best EV 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 let's analyze the new hedge fund action encompassing Camping World Holdings, Inc. (NYSE:CWH).
Do Hedge Funds Think CWH Is A Good Stock To Buy Now?
At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CWH over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Abrams Capital Management held the most valuable stake in Camping World Holdings, Inc. (NYSE:CWH), which was worth $209.4 million at the end of the second quarter. On the second spot was Tontine Asset Management which amassed $22.8 million worth of shares. D E Shaw, Citadel Investment Group, and Harspring 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 Abrams Capital Management allocated the biggest weight to Camping World Holdings, Inc. (NYSE:CWH), around 4.65% of its 13F portfolio. Tontine Asset Management is also relatively very bullish on the stock, designating 2.02 percent of its 13F equity portfolio to CWH.
Seeing as Camping World Holdings, Inc. (NYSE:CWH) has experienced falling interest from the smart money, we can see that there lies a certain "tier" of funds that elected to cut their full holdings heading into Q3. Interestingly, Frank Fu's CaaS Capital sold off the biggest stake of the 750 funds followed by Insider Monkey, valued at close to $20.3 million in stock. Brad Farber's fund, Atika Capital, also cut its stock, about $9.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds heading into Q3.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Camping World Holdings, Inc. (NYSE:CWH) but similarly valued. These stocks are Spectrum Brands Holdings, Inc. (NYSE:SPB), Shutterstock Inc (NYSE:SSTK), Vonage Holdings Corp. (NYSE:VG), Steven Madden, Ltd. (NASDAQ:SHOO), Merit Medical Systems, Inc. (NASDAQ:MMSI), AtriCure Inc. (NASDAQ:ATRC), and INMODE LTD. (NASDAQ:INMD). This group of stocks' market valuations match CWH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPB,35,578244,-2 SSTK,18,214408,0 VG,29,708094,-7 SHOO,18,157045,-1 MMSI,22,389076,4 ATRC,21,242542,7 INMD,26,298204,3 Average,24.1,369659,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $370 million. That figure was $293 million in CWH's case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand Shutterstock Inc (NYSE:SSTK) is the least popular one with only 18 bullish hedge fund positions. Camping World Holdings, Inc. (NYSE:CWH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CWH is 27.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately CWH wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CWH investors were disappointed as the stock returned -8.6% since the end of June (through 10/22) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
Source : https://finance.yahoo.com/news/hedge-funds-love-camping-world-192516449.html1531