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In this article we will take a look at whether hedge funds think Americold Realty Trust (NYSE:COLD) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is COLD stock a buy? Prominent investors were taking a pessimistic view. The number of long hedge fund positions went down by 1 recently. Americold Realty Trust (NYSE:COLD) was in 29 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. Our calculations also showed that COLD isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with COLD holdings at the end of September.
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 124 percentage points since March 2017 (see the details here).
Howard Marks of Oaktree Capital Management
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Do Hedge Funds Think COLD Is A Good Stock To Buy Now?
At the end of December, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards COLD over the last 22 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Oaktree Capital Management held the most valuable stake in Americold Realty Trust (NYSE:COLD), which was worth $439.4 million at the end of the fourth quarter. On the second spot was Zimmer Partners which amassed $240.8 million worth of shares. Millennium Management, Waterfront Capital Partners, and JS Capital 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 Oaktree Capital Management allocated the biggest weight to Americold Realty Trust (NYSE:COLD), around 7.6% of its 13F portfolio. Hudson Way Capital Management is also relatively very bullish on the stock, dishing out 5.19 percent of its 13F equity portfolio to COLD.
Since Americold Realty Trust (NYSE:COLD) has experienced a decline in interest from hedge fund managers, it's safe to say that there is a sect of hedgies that decided to sell off their entire stakes by the end of the fourth quarter. Interestingly, Jonathan Litt's Land & Buildings Investment Management dropped the largest investment of the 750 funds tracked by Insider Monkey, valued at about $30 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also sold off its stock, about $23.1 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds by the end of the fourth quarter.
Let's go over hedge fund activity in other stocks similar to Americold Realty Trust (NYSE:COLD). These stocks are Diamondback Energy Inc (NASDAQ:FANG), Woodward Inc (NASDAQ:WWD), BlackLine, Inc. (NASDAQ:BL), Reliance Steel & Aluminum Co. (NYSE:RS), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), Sotera Health Company (NASDAQ:SHC), and Jones Lang LaSalle Inc (NYSE:JLL). This group of stocks' market valuations resemble COLD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FANG,34,412034,11 WWD,19,674846,-5 BL,23,324440,6 RS,27,364516,-3 RBA,23,522011,2 SHC,27,321284,27 JLL,23,1093523,-2 Average,25.1,530379,5.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $530 million. That figure was $913 million in COLD's case. Diamondback Energy Inc (NASDAQ:FANG) is the most popular stock in this table. On the other hand Woodward Inc (NASDAQ:WWD) is the least popular one with only 19 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. Our overall hedge fund sentiment score for COLD is 65.4. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately COLD wasn't nearly as popular as these 30 stocks and hedge funds that were betting on COLD were disappointed as the stock returned 6.6% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.