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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Americold Realty Trust (NYSE:COLD) based on those filings.
Americold Realty Trust (NYSE:COLD) was in 27 hedge funds' portfolios at the end of September. COLD investors should be aware of a decrease in hedge fund sentiment of late. There were 30 hedge funds in our database with COLD positions at the end of the previous quarter. Our calculations also showed that COLD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 stocks that are in our short portfolio.
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Dan Loeb of Third Point[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to go over the fresh hedge fund action encompassing Americold Realty Trust (NYSE:COLD).
What have hedge funds been doing with Americold Realty Trust (NYSE:COLD)?
Heading into the fourth quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards COLD over the last 17 quarters. 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, David E. Shaw's D E Shaw has the number one position in Americold Realty Trust (NYSE:COLD), worth close to $54.7 million, amounting to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $49 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Dan Loeb's Third Point, Israel Englander's Millennium Management and Ken Heebner's Capital Growth Management. In terms of the portfolio weights assigned to each position SkyTop Capital Management allocated the biggest weight to Americold Realty Trust (NYSE:COLD), around 6.1% of its portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 5.44 percent of its 13F equity portfolio to COLD.
Because Americold Realty Trust (NYSE:COLD) has faced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedge funds who were dropping their entire stakes last quarter. Interestingly, Doug Silverman and Alexander Klabin's Senator Investment Group cut the largest position of the 750 funds watched by Insider Monkey, comprising an estimated $113.5 million in stock. Stuart J. Zimmer's fund, Zimmer Partners, also said goodbye to its stock, about $108.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Americold Realty Trust (NYSE:COLD). We will take a look at Woori Financial Group Inc. (NYSE:WF), Pearson PLC (NYSE:PSO), Hill-Rom Holdings, Inc. (NYSE:HRC), and Axalta Coating Systems Ltd (NYSE:AXTA). All of these stocks' market caps are similar to COLD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WF,2,2420,1 PSO,3,5491,-1 HRC,26,663107,-1 AXTA,56,2298717,15 Average,21.75,742434,3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $742 million. That figure was $472 million in COLD's case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand Woori Financial Group Inc. (NYSE:WF) is the least popular one with only 2 bullish hedge fund positions. Americold Realty Trust (NYSE:COLD) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately COLD wasn't nearly as popular as these 20 stocks and hedge funds that were betting on COLD were disappointed as the stock returned 1.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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