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Hedge Funds Aren’t Crazy About C.H. Robinson Worldwide, Inc. (CHRW) Anymore

Reymerlyn Martin

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) a healthy stock for your portfolio? Money managers are getting less bullish. The number of bullish hedge fund bets fell by 10 lately. Our calculations also showed that CHRW 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.

5 Most Popular Stocks Among Hedge Funds

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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

AQR CAPITAL MANAGEMENT

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. We're going to check out the key hedge fund action regarding C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).

How are hedge funds trading C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)?

Heading into the third quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the first quarter of 2019. On the other hand, there were a total of 30 hedge funds with a bullish position in CHRW 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.

CHRW_oct2019

The largest stake in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) was held by D E Shaw, which reported holding $67.3 million worth of stock at the end of March. It was followed by AQR Capital Management with a $66.2 million position. Other investors bullish on the company included Two Sigma Advisors, Citadel Investment Group, and Renaissance Technologies.

Because C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there is a sect of fund managers that decided to sell off their full holdings by the end of the second quarter. Interestingly, Israel Englander's Millennium Management cut the largest stake of all the hedgies followed by Insider Monkey, comprising an estimated $32.9 million in stock. Ray Dalio's fund, Bridgewater Associates, also cut its stock, about $8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 10 funds by the end of the second quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) but similarly valued. We will take a look at Regency Centers Corp (NASDAQ:REG), Open Text Corporation (NASDAQ:OTEX), SVB Financial Group (NASDAQ:SIVB), and Burlington Stores Inc (NYSE:BURL). This group of stocks' market values are similar to CHRW's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REG,12,319525,-5 OTEX,16,778997,-6 SIVB,26,484420,-3 BURL,31,1536898,0 Average,21.25,779960,-3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $780 million. That figure was $351 million in CHRW's case. Burlington Stores Inc (NYSE:BURL) is the most popular stock in this table. On the other hand Regency Centers Corp (NASDAQ:REG) is the least popular one with only 12 bullish hedge fund positions. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 CHRW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CHRW investors were disappointed as the stock returned 1.1% 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 in 2019.

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

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