Hedge Funds Have Never Been This Bullish On Charles River Laboratories International Inc. (CRL)
The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Charles River Laboratories International Inc. (NYSE:CRL).
Charles River Laboratories International Inc. (NYSE:CRL) was in 32 hedge funds' portfolios at the end of September. CRL shareholders have witnessed an increase in hedge fund interest in recent months. There were 29 hedge funds in our database with CRL positions at the end of the previous quarter. Our calculations also showed that CRL 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.
Why do we pay any attention at all to hedge fund sentiment? 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_731890" align="aligncenter" width="600"]
John Rogers of Ariel Investments[/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. We're going to check out the fresh hedge fund action regarding Charles River Laboratories International Inc. (NYSE:CRL).
What does smart money think about Charles River Laboratories International Inc. (NYSE:CRL)?
At Q3's end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2019. By comparison, 20 hedge funds held shares or bullish call options in CRL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Charles River Laboratories International Inc. (NYSE:CRL) was held by AQR Capital Management, which reported holding $265.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $192.8 million position. Other investors bullish on the company included Ariel Investments, Fisher Asset Management, and Sculptor Capital. In terms of the portfolio weights assigned to each position MD Sass allocated the biggest weight to Charles River Laboratories International Inc. (NYSE:CRL), around 3.14% of its portfolio. Endurant Capital Management is also relatively very bullish on the stock, dishing out 2.95 percent of its 13F equity portfolio to CRL.
As industrywide interest jumped, key money managers have jumped into Charles River Laboratories International Inc. (NYSE:CRL) headfirst. Endurant Capital Management, managed by Vishal Saluja and Pham Quang, created the most valuable position in Charles River Laboratories International Inc. (NYSE:CRL). Endurant Capital Management had $9.9 million invested in the company at the end of the quarter. Michael Kharitonov and Jon David McAuliffe's Voleon Capital also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, Ray Dalio's Bridgewater Associates, and Matthew Tewksbury's Stevens Capital Management.
Let's check out hedge fund activity in other stocks similar to Charles River Laboratories International Inc. (NYSE:CRL). We will take a look at East West Bancorp, Inc. (NASDAQ:EWBC), Watsco Inc (NYSE:WSO), HubSpot Inc (NYSE:HUBS), and Momo Inc (NASDAQ:MOMO). All of these stocks' market caps resemble CRL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EWBC,27,426545,-1 WSO,18,138904,-4 HUBS,34,820740,1 MOMO,27,827296,5 Average,26.5,553371,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $553 million. That figure was $875 million in CRL's case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Watsco Inc (NYSE:WSO) is the least popular one with only 18 bullish hedge fund positions. Charles River Laboratories International Inc. (NYSE:CRL) 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 CRL, though not to the same extent, as the stock returned 9.7% 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.
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