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While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Charles River Laboratories International Inc. (NYSE:CRL).
Is Charles River Laboratories International Inc. (NYSE:CRL) a buy here? Prominent investors were turning less bullish. The number of long hedge fund positions shrunk by 1 lately. Charles River Laboratories International Inc. (NYSE:CRL) was in 42 hedge funds' portfolios at the end of March. The all time high for this statistic is 43. Our calculations also showed that CRL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are tons of gauges market participants can use to size up publicly traded companies. A pair of the less utilized gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the S&P 500 by a solid margin (see the details here). 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 .
John Rogers of Ariel Investments
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 we're going to take a look at the key hedge fund action regarding Charles River Laboratories International Inc. (NYSE:CRL).
Do Hedge Funds Think CRL Is A Good Stock To Buy Now?
At the end of March, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from the fourth quarter of 2020. On the other hand, there were a total of 36 hedge funds with a bullish position in CRL a year ago. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Viking Global held the most valuable stake in Charles River Laboratories International Inc. (NYSE:CRL), which was worth $130.1 million at the end of the fourth quarter. On the second spot was Ariel Investments which amassed $119.1 million worth of shares. Iridian Asset Management, Fisher Asset Management, and Sandler Capital Management 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 Tower House Partners allocated the biggest weight to Charles River Laboratories International Inc. (NYSE:CRL), around 22.18% of its 13F portfolio. Iron Triangle Partners is also relatively very bullish on the stock, earmarking 5.16 percent of its 13F equity portfolio to CRL.
Because Charles River Laboratories International Inc. (NYSE:CRL) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds that slashed their full holdings in the first quarter. It's worth mentioning that Arthur B Cohen and Joseph Healey's Healthcor Management LP cut the largest investment of the "upper crust" of funds watched by Insider Monkey, totaling an estimated $26.9 million in stock. Ricky Sandler's fund, Eminence Capital, also sold off its stock, about $17 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds in the first quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Charles River Laboratories International Inc. (NYSE:CRL) but similarly valued. These stocks are Wynn Resorts, Limited (NASDAQ:WYNN), ABIOMED, Inc. (NASDAQ:ABMD), PerkinElmer, Inc. (NYSE:PKI), FMC Corporation (NYSE:FMC), Domino's Pizza, Inc. (NYSE:DPZ), Fair Isaac Corporation (NYSE:FICO), and Equitable Holdings, Inc. (NYSE:EQH). All of these stocks' market caps are closest to CRL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WYNN,49,1074268,-3 ABMD,26,1003000,3 PKI,33,1748962,2 FMC,32,499555,-13 DPZ,29,2176091,-8 FICO,27,1355293,-11 EQH,44,1699164,-2 Average,34.3,1365190,-4.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.3 hedge funds with bullish positions and the average amount invested in these stocks was $1365 million. That figure was $1119 million in CRL's case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand ABIOMED, Inc. (NASDAQ:ABMD) is the least popular one with only 26 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 overall hedge fund sentiment score for CRL is 68.1. 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. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on CRL as the stock returned 22% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.