Is Comstock Holding Companies (CHCI) A Good Stock To Buy?

Reymerlyn Martin
·6 min read

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Comstock Holding Companies, Inc. (NASDAQ:CHCI) in this article.

Comstock Holding Companies, Inc. (NASDAQ:CHCI) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CHCI has seen an increase in hedge fund interest recently. There were 2 hedge funds in our database with CHCI positions at the end of the second quarter. Our calculations also showed that CHCI isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

RENAISSANCE TECHNOLOGIES
RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Now let's go over the recent hedge fund action surrounding Comstock Holding Companies, Inc. (NASDAQ:CHCI).

How are hedge funds trading Comstock Holding Companies, Inc. (NASDAQ:CHCI)?

At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter of 2020. By comparison, 1 hedge funds held shares or bullish call options in CHCI a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Tim Curro's Value Holdings LP has the biggest position in Comstock Holding Companies, Inc. (NASDAQ:CHCI), worth close to $0.5 million, amounting to 0.2% of its total 13F portfolio. On Value Holdings LP's heels is Renaissance Technologies, founded by Jim Simons, which holds a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Comstock Holding Companies, Inc. (NASDAQ:CHCI), around 0.18% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, designating 0.0029 percent of its 13F equity portfolio to CHCI.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. Bailard Inc, managed by Thomas Bailard, created the largest position in Comstock Holding Companies, Inc. (NASDAQ:CHCI). Bailard Inc had $0.1 million invested in the company at the end of the quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Comstock Holding Companies, Inc. (NASDAQ:CHCI) but similarly valued. These stocks are Hallador Energy Co (NASDAQ:HNRG), U.S. Well Services, Inc. (NASDAQ:USWS), CounterPath Corporation (NASDAQ:CPAH), Taoping Inc. (NASDAQ:TAOP), Acasti Pharma Inc. (NASDAQ:ACST), Image Sensing Systems, Inc. (NASDAQ:ISNS), and Coffee Holding Co., Inc. (NASDAQ:JVA). This group of stocks' market valuations resemble CHCI's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HNRG,6,1061,-6 USWS,6,379,0 CPAH,2,802,1 TAOP,1,325,-1 ACST,1,57,-2 ISNS,1,798,0 JVA,2,2521,0 Average,2.7,849,-1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.7 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in CHCI's case. Hallador Energy Co (NASDAQ:HNRG) is the most popular stock in this table. On the other hand Taoping Inc. (NASDAQ:TAOP) is the least popular one with only 1 bullish hedge fund positions. Comstock Holding Companies, Inc. (NASDAQ:CHCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHCI is 56. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about betting on CHCI as the stock returned 11.8% since the end of Q3 (through 11/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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