We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Carlisle Companies, Inc. (NYSE:CSL).
Carlisle Companies, Inc. (NYSE:CSL) was in 30 hedge funds' portfolios at the end of the third quarter of 2019. CSL shareholders have witnessed an increase in support from the world's most elite money managers of late. There were 25 hedge funds in our database with CSL holdings at the end of the previous quarter. Our calculations also showed that CSL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
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 take a look at the recent hedge fund action regarding Carlisle Companies, Inc. (NYSE:CSL).
What does smart money think about Carlisle Companies, Inc. (NYSE:CSL)?
Heading into the fourth quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CSL 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.
According to Insider Monkey's hedge fund database, Alyeska Investment Group, managed by Anand Parekh, holds the largest position in Carlisle Companies, Inc. (NYSE:CSL). Alyeska Investment Group has a $47.5 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $46.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Dmitry Balyasny's Balyasny Asset Management, Israel Englander's Millennium Management and Richard S. Pzena's Pzena Investment Management. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to Carlisle Companies, Inc. (NYSE:CSL), around 11.54% of its portfolio. Shellback Capital is also relatively very bullish on the stock, setting aside 2.78 percent of its 13F equity portfolio to CSL.
As aggregate interest increased, some big names were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, established the largest position in Carlisle Companies, Inc. (NYSE:CSL). Alyeska Investment Group had $47.5 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $5 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace, Paul Tudor Jones's Tudor Investment Corp, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's go over hedge fund activity in other stocks similar to Carlisle Companies, Inc. (NYSE:CSL). We will take a look at Lamar Advertising Company (REIT) (NASDAQ:LAMR), Tradeweb Markets Inc. (NASDAQ:TW), Gaming and Leisure Properties Inc (NASDAQ:GLPI), and National Oilwell Varco, Inc. (NYSE:NOV). All of these stocks' market caps are similar to CSL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LAMR,28,238134,4 TW,37,400592,0 GLPI,31,773259,4 NOV,23,894471,1 Average,29.75,576614,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $577 million. That figure was $455 million in CSL's case. Tradeweb Markets Inc. (NASDAQ:TW) is the most popular stock in this table. On the other hand National Oilwell Varco, Inc. (NYSE:NOV) is the least popular one with only 23 bullish hedge fund positions. Carlisle Companies, Inc. (NYSE:CSL) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on CSL, though not to the same extent, as the stock returned 7.5% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.