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Hedge Funds Are Crazy About Casella Waste Systems Inc. (CWST)

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  • CWST
  • ^GSPC

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Casella Waste Systems Inc. (NASDAQ:CWST).

Casella Waste Systems Inc. (NASDAQ:CWST) was in 20 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CWST investors should be aware of an increase in hedge fund sentiment of late. There were 19 hedge funds in our database with CWST holdings at the end of December. Our calculations also showed that CWST isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most stock holders, hedge funds are viewed as slow, old investment vehicles of years past. While there are more than 8000 funds trading today, We choose to focus on the moguls of this club, about 850 funds. These money managers direct most of the smart money's total asset base, and by following their matchless equity investments, Insider Monkey has determined various investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Billionaire Mario Gabelli's top 10 Stock Picks
Billionaire Mario Gabelli's top 10 Stock Picks

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind let's take a look at the new hedge fund action surrounding Casella Waste Systems Inc. (NASDAQ:CWST).

Do Hedge Funds Think CWST Is A Good Stock To Buy Now?

At Q1's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in CWST a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in Casella Waste Systems Inc. (NASDAQ:CWST) was held by Renaissance Technologies, which reported holding $72.8 million worth of stock at the end of December. It was followed by GAMCO Investors with a $10 million position. Other investors bullish on the company included Citadel Investment Group, Brant Point Investment Management, and GLG Partners. In terms of the portfolio weights assigned to each position Fairpointe Capital allocated the biggest weight to Casella Waste Systems Inc. (NASDAQ:CWST), around 0.5% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, setting aside 0.36 percent of its 13F equity portfolio to CWST.

As industrywide interest jumped, specific money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Casella Waste Systems Inc. (NASDAQ:CWST). Citadel Investment Group had $8.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $1.7 million position during the quarter. The following funds were also among the new CWST investors: Ken Griffin's Citadel Investment Group, Paul Tudor Jones's Tudor Investment Corp, and Brandon Haley's Holocene Advisors.

Let's check out hedge fund activity in other stocks similar to Casella Waste Systems Inc. (NASDAQ:CWST). These stocks are Energizer Holdings, Inc. (NYSE:ENR), CNO Financial Group Inc (NYSE:CNO), Ingevity Corporation (NYSE:NGVT), Cathay General Bancorp (NASDAQ:CATY), Turquoise Hill Resources Ltd (NYSE:TRQ), Canaan Inc. (NASDAQ:CAN), and CNX Resources Corporation (NYSE:CNX). This group of stocks' market caps are similar to CWST's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENR,22,237518,-4 CNO,18,380221,1 NGVT,20,280427,-4 CATY,12,130599,2 TRQ,13,575312,1 CAN,9,47017,5 CNX,23,607003,-2 Average,16.7,322585,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $323 million. That figure was $107 million in CWST's case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Canaan Inc. (NASDAQ:CAN) is the least popular one with only 9 bullish hedge fund positions. Casella Waste Systems Inc. (NASDAQ:CWST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CWST is 75.3. 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 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately CWST wasn't nearly as popular as these 5 stocks and hedge funds that were betting on CWST were disappointed as the stock returned 2% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.