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Clean Harbors Inc (CLH): Hedge Funds In Wait-and-See Mode

Nina Todic

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Clean Harbors Inc (NYSE:CLH).

Is Clean Harbors Inc (NYSE:CLH) a healthy stock for your portfolio? The smart money is selling. The number of bullish hedge fund bets shrunk by 1 in recent months. Our calculations also showed that CLH isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CLH was in 26 hedge funds' portfolios at the end of September. There were 27 hedge funds in our database with CLH positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

In the financial world there are a multitude of tools investors put to use to assess stocks. Some of the best tools are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a healthy margin (see the details here).

[caption id="attachment_69704" align="aligncenter" width="450"] Andrew Sandler of Sandler Capital Management[/caption]

Andrew Sandler of Sandler Capital Management
Andrew Sandler of Sandler Capital Management

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. Let's analyze the key hedge fund action surrounding Clean Harbors Inc (NYSE:CLH).

How are hedge funds trading Clean Harbors Inc (NYSE:CLH)?

At Q3's end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CLH over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CLH Positions
No of Hedge Funds with CLH Positions

More specifically, Renaissance Technologies was the largest shareholder of Clean Harbors Inc (NYSE:CLH), with a stake worth $136.7 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $61.6 million. Impax Asset Management, Columbus Circle Investors, and Sandler 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 12th Street Asset Management allocated the biggest weight to Clean Harbors Inc (NYSE:CLH), around 3.9% of its portfolio. Columbus Circle Investors is also relatively very bullish on the stock, setting aside 1.56 percent of its 13F equity portfolio to CLH.

Since Clean Harbors Inc (NYSE:CLH) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies that decided to sell off their entire stakes by the end of the third quarter. Interestingly, Israel Englander's Millennium Management cut the biggest investment of all the hedgies monitored by Insider Monkey, comprising about $3.6 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also dumped its stock, about $3.1 million worth. These moves are interesting, as total hedge fund interest fell by 1 funds by the end of the third quarter.

Let's also examine hedge fund activity in other stocks similar to Clean Harbors Inc (NYSE:CLH). These stocks are Qurate Retail, Inc. (NASDAQ:QRTEA), The Stars Group Inc. (NASDAQ:TSG), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), and CIT Group Inc. (NYSE:CIT). This group of stocks' market valuations resemble CLH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QRTEA,32,735658,-1 TSG,34,717299,-4 RBA,13,185553,1 CIT,27,810397,2 Average,26.5,612227,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $612 million. That figure was $388 million in CLH's case. The Stars Group Inc. (NASDAQ:TSG) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) is the least popular one with only 13 bullish hedge fund positions. Clean Harbors Inc (NYSE:CLH) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on CLH, though not to the same extent, as the stock returned 7.1% during the first two months of the fourth quarter and outperformed the market.

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

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