Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) an excellent investment right now? The best stock pickers are getting more optimistic. The number of long hedge fund bets moved up by 3 in recent months. Our calculations also showed that CHRW isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). CHRW was in 23 hedge funds' portfolios at the end of the third quarter of 2019. There were 20 hedge funds in our database with CHRW 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.
To most investors, hedge funds are assumed to be unimportant, outdated financial vehicles of yesteryear. While there are more than 8000 funds trading at present, Our experts hone in on the upper echelon of this club, approximately 750 funds. These hedge fund managers administer the majority of the hedge fund industry's total asset base, and by monitoring their matchless investments, Insider Monkey has determined numerous investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually 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_673972" align="aligncenter" width="473"] Blair Levinsky of Waratah Capital 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 view the key hedge fund action surrounding C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).
What does smart money think about C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHRW over the last 17 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Two Sigma Advisors was the largest shareholder of C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), with a stake worth $62.8 million reported as of the end of September. Trailing Two Sigma Advisors was AQR Capital Management, which amassed a stake valued at $59.5 million. Citadel Investment Group, D E Shaw, and GLG Partners 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 Signition LP allocated the biggest weight to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), around 1.28% of its 13F portfolio. Cognios Capital is also relatively very bullish on the stock, dishing out 0.91 percent of its 13F equity portfolio to CHRW.
Now, specific money managers have jumped into C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) headfirst. Millennium Management, managed by Israel Englander, established the most outsized position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). Millennium Management had $6.9 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also made a $0.8 million investment in the stock during the quarter. The other funds with brand new CHRW positions are Brad Dunkley and Blair Levinsky's Waratah Capital Advisors, Donald Sussman's Paloma Partners, and Alec Litowitz and Ross Laser's Magnetar Capital.
Let's now review hedge fund activity in other stocks similar to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). These stocks are Raymond James Financial, Inc. (NYSE:RJF), Arconic Inc. (NYSE:ARNC), Yandex NV (NASDAQ:YNDX), and FMC Corporation (NYSE:FMC). 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 RJF,27,793083,-8 ARNC,34,3136590,-8 YNDX,35,809543,5 FMC,36,788705,0 Average,33,1381980,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1382 million. That figure was $300 million in CHRW's case. FMC Corporation (NYSE:FMC) is the most popular stock in this table. On the other hand Raymond James Financial, Inc. (NYSE:RJF) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is even less popular than RJF. Hedge funds dodged a bullet by taking a bearish stance towards CHRW. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CHRW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CHRW investors were disappointed as the stock returned -9.4% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.