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Hedge Funds Have Never Been This Bullish On Copart, Inc. (CPRT)

Nina Todic

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 Copart, Inc. (NASDAQ:CPRT).

Is Copart, Inc. (NASDAQ:CPRT) the right investment to pursue these days? Investors who are in the know are getting more optimistic. The number of bullish hedge fund positions increased by 6 lately. Our calculations also showed that CPRT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CPRT was in 36 hedge funds' portfolios at the end of September. There were 30 hedge funds in our database with CPRT positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the eyes of most traders, hedge funds are viewed as unimportant, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at the moment, Our experts look at the moguls of this group, about 750 funds. It is estimated that this group of investors shepherd most of all hedge funds' total capital, and by paying attention to their matchless investments, Insider Monkey has found many investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_670377" align="aligncenter" width="473"] Aaron Cowen of Suvretta Capital Management[/caption]

Aaron Cowen Suvretta Capital

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 new hedge fund action encompassing Copart, Inc. (NASDAQ:CPRT).

What have hedge funds been doing with Copart, Inc. (NASDAQ:CPRT)?

At Q3's end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in CPRT over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

No of Hedge Funds with CPRT Positions

Among these funds, Arrowstreet Capital held the most valuable stake in Copart, Inc. (NASDAQ:CPRT), which was worth $93.8 million at the end of the third quarter. On the second spot was Suvretta Capital Management which amassed $58.1 million worth of shares. Nitorum Capital, Millennium Management, and Renaissance Technologies 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 Nitorum Capital allocated the biggest weight to Copart, Inc. (NASDAQ:CPRT), around 3.27% of its portfolio. GRT Capital Partners is also relatively very bullish on the stock, dishing out 3.25 percent of its 13F equity portfolio to CPRT.

Now, key hedge funds have been driving this bullishness. Nitorum Capital, managed by Seth Rosen, assembled the biggest position in Copart, Inc. (NASDAQ:CPRT). Nitorum Capital had $56.2 million invested in the company at the end of the quarter. Renaissance Technologies also made a $50 million investment in the stock during the quarter. The following funds were also among the new CPRT investors: Paul Marshall and Ian Wace's Marshall Wace, John Overdeck and David Siegel's Two Sigma Advisors, and Vikas Lunia's Lunia Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Copart, Inc. (NASDAQ:CPRT) but similarly valued. These stocks are IAC/InterActiveCorp (NASDAQ:IAC), Arista Networks Inc (NYSE:ANET), Keysight Technologies Inc (NYSE:KEYS), and Restaurant Brands International Inc (NYSE:QSR). This group of stocks' market valuations resemble CPRT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IAC,51,2111302,4 ANET,20,178704,-8 KEYS,45,999981,6 QSR,55,4249554,16 Average,42.75,1884885,4.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.75 hedge funds with bullish positions and the average amount invested in these stocks was $1885 million. That figure was $580 million in CPRT's case. Restaurant Brands International Inc (NYSE:QSR) is the most popular stock in this table. On the other hand Arista Networks Inc (NYSE:ANET) is the least popular one with only 20 bullish hedge fund positions. Copart, Inc. (NASDAQ:CPRT) is not the least popular stock in this group but hedge fund interest is still below 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. A small number of hedge funds were also right about betting on CPRT as the stock returned 10.8% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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