Is Copart, Inc. (CPRT) A Good Stock To Buy?
Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Copart, Inc. (NASDAQ:CPRT).
Is CPRT a good stock to buy? Copart, Inc. (NASDAQ:CPRT) was in 49 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 60. CPRT has experienced an increase in support from the world's most elite money managers in recent months. There were 46 hedge funds in our database with CPRT holdings at the end of December. Our calculations also showed that CPRT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Kevin Oram of Praesidium Investment Management Company
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's review the latest hedge fund action regarding Copart, Inc. (NASDAQ:CPRT).
Do Hedge Funds Think CPRT Is A Good Stock To Buy Now?
At the end of March, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CPRT over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Candlestick Capital Management was the largest shareholder of Copart, Inc. (NASDAQ:CPRT), with a stake worth $139.6 million reported as of the end of March. Trailing Candlestick Capital Management was Praesidium Investment Management Company, which amassed a stake valued at $119.7 million. Point72 Asset Management, Gobi Capital, and Echo Street 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 Gobi Capital allocated the biggest weight to Copart, Inc. (NASDAQ:CPRT), around 6.78% of its 13F portfolio. Lionstone Capital Management is also relatively very bullish on the stock, designating 6.25 percent of its 13F equity portfolio to CPRT.
As industrywide interest jumped, specific money managers have been driving this bullishness. Renaissance Technologies, assembled the most valuable position in Copart, Inc. (NASDAQ:CPRT). Renaissance Technologies had $46.5 million invested in the company at the end of the quarter. Peter Avellone's Cartenna Capital also initiated a $7.7 million position during the quarter. The other funds with new positions in the stock are Brandon Haley's Holocene Advisors, Alec Litowitz and Ross Laser's Magnetar Capital, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's also examine hedge fund activity in other stocks similar to Copart, Inc. (NASDAQ:CPRT). These stocks are Consolidated Edison, Inc. (NYSE:ED), Datadog, Inc. (NASDAQ:DDOG), Credit Suisse Group AG (NYSE:CS), TELUS Corporation (NYSE:TU), Etsy Inc (NASDAQ:ETSY), Garmin Ltd. (NASDAQ:GRMN), and Sirius XM Holdings Inc (NASDAQ:SIRI). This group of stocks' market caps match CPRT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ED,22,196630,-10 DDOG,44,2383744,-8 CS,13,35775,2 TU,18,200045,4 ETSY,53,1645009,-3 GRMN,23,513329,-4 SIRI,24,570460,-8 Average,28.1,792142,-3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $792 million. That figure was $967 million in CPRT's case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 13 bullish hedge fund positions. Copart, Inc. (NASDAQ:CPRT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPRT is 77.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on CPRT as the stock returned 18% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
