We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. That's a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Chart Industries, Inc. (NASDAQ:GTLS) a buy here? Money managers are becoming less hopeful. The number of long hedge fund positions decreased by 5 recently. Our calculations also showed that GTLS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). GTLS was in 19 hedge funds' portfolios at the end of September. There were 24 hedge funds in our database with GTLS holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a lot of gauges market participants can use to evaluate their holdings. A couple of the less utilized gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outclass the broader indices by a very impressive amount (see the details here).
[caption id="attachment_26092" align="aligncenter" width="482"] Joel Greenblatt of Gotham Asset Management[/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 recent hedge fund action regarding Chart Industries, Inc. (NASDAQ:GTLS).
How have hedgies been trading Chart Industries, Inc. (NASDAQ:GTLS)?
At Q3's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the second quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in GTLS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Chart Industries, Inc. (NASDAQ:GTLS), which was worth $78.2 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $62.4 million worth of shares. Millennium Management, SIR Capital Management, and Alyeska Investment Group 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 SIR Capital Management allocated the biggest weight to Chart Industries, Inc. (NASDAQ:GTLS), around 4.72% of its 13F portfolio. Yaupon Capital is also relatively very bullish on the stock, designating 4.07 percent of its 13F equity portfolio to GTLS.
Since Chart Industries, Inc. (NASDAQ:GTLS) has experienced falling interest from the smart money, it's easy to see that there exists a select few fund managers who were dropping their positions entirely by the end of the third quarter. It's worth mentioning that Principal Global Investors's Columbus Circle Investors said goodbye to the biggest investment of the 750 funds followed by Insider Monkey, comprising an estimated $41.5 million in stock, and Jos Shaver's Electron Capital Partners was right behind this move, as the fund said goodbye to about $10.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 5 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Chart Industries, Inc. (NASDAQ:GTLS) but similarly valued. We will take a look at Sanmina Corporation (NASDAQ:SANM), Franklin Electric Co., Inc. (NASDAQ:FELE), Hilltop Holdings Inc. (NYSE:HTH), and Rapid7 Inc (NASDAQ:RPD). This group of stocks' market caps resemble GTLS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SANM,20,211992,2 FELE,11,216330,-3 HTH,19,94682,1 RPD,23,227036,-2 Average,18.25,187510,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $261 million in GTLS's case. Rapid7 Inc (NASDAQ:RPD) is the most popular stock in this table. On the other hand Franklin Electric Co., Inc. (NASDAQ:FELE) is the least popular one with only 11 bullish hedge fund positions. Chart Industries, Inc. (NASDAQ:GTLS) 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 GTLS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GTLS were disappointed as the stock returned -11.5% 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.