Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees during the first half of 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the second quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Charles River Laboratories International Inc. (NYSE:CRL).
Is Charles River Laboratories International Inc. (NYSE:CRL) a worthy investment right now? The best stock pickers are taking a bullish view. The number of bullish hedge fund bets improved by 5 in recent months. Our calculations also showed that CRL isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of indicators stock traders employ to analyze their holdings. Two of the most underrated indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outclass the broader indices by a healthy amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's review the recent hedge fund action regarding Charles River Laboratories International Inc. (NYSE:CRL).
How are hedge funds trading Charles River Laboratories International Inc. (NYSE:CRL)?
Heading into the third quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CRL over the last 16 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Cliff Asness's AQR Capital Management has the most valuable position in Charles River Laboratories International Inc. (NYSE:CRL), worth close to $317.8 million, comprising 0.4% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $236.2 million position; 0.2% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism include John W. Rogers's Ariel Investments, Ken Fisher's Fisher Asset Management and Israel Englander's Millennium Management.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Charles River Laboratories International Inc. (NYSE:CRL) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, initiated the biggest position in Charles River Laboratories International Inc. (NYSE:CRL). Healthcor Management LP had $51.7 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also made a $20.7 million investment in the stock during the quarter. The following funds were also among the new CRL investors: Frederick DiSanto's Ancora Advisors, Martin D. Sass's MD Sass, and Alec Litowitz and Ross Laser's Magnetar Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Charles River Laboratories International Inc. (NYSE:CRL) but similarly valued. These stocks are Robert Half International Inc. (NYSE:RHI), Hexcel Corporation (NYSE:HXL), Sealed Air Corporation (NYSE:SEE), and Five Below Inc (NASDAQ:FIVE). This group of stocks' market caps are closest to CRL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RHI,26,618890,1 HXL,23,150565,-2 SEE,27,1009952,-2 FIVE,38,550414,0 Average,28.5,582455,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $582 million. That figure was $1067 million in CRL's case. Five Below Inc (NASDAQ:FIVE) is the most popular stock in this table. On the other hand Hexcel Corporation (NYSE:HXL) is the least popular one with only 23 bullish hedge fund positions. Charles River Laboratories International Inc. (NYSE:CRL) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CRL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CRL were disappointed as the stock returned -6.7% during the third quarter 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.