We can judge whether Core Laboratories N.V. (NYSE:CLB) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Core Laboratories N.V. (NYSE:CLB) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds' portfolios at the end of the first quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as RLJ Lodging Trust (NYSE:RLJ), Amicus Therapeutics, Inc. (NASDAQ:FOLD), and Tegna Inc (NYSE:TGNA) to gather more data points.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
Let's take a gander at the new hedge fund action surrounding Core Laboratories N.V. (NYSE:CLB).
What does smart money think about Core Laboratories N.V. (NYSE:CLB)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2018. On the other hand, there were a total of 19 hedge funds with a bullish position in CLB a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander's Millennium Management has the largest position in Core Laboratories N.V. (NYSE:CLB), worth close to $65 million, comprising 0.1% of its total 13F portfolio. On Millennium Management's heels is Robert Joseph Caruso of Select Equity Group, with a $64.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism consist of Ken Fisher's Fisher Asset Management, Ken Griffin's Citadel Investment Group and John W. Rogers's Ariel Investments.
Since Core Laboratories N.V. (NYSE:CLB) has experienced falling interest from hedge fund managers, it's safe to say that there exists a select few fund managers who were dropping their entire stakes last quarter. It's worth mentioning that Joel Greenblatt's Gotham Asset Management said goodbye to the largest investment of the "upper crust" of funds monitored by Insider Monkey, worth about $0.9 million in stock, and Matthew Tewksbury's Stevens Capital Management was right behind this move, as the fund sold off about $0.7 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Core Laboratories N.V. (NYSE:CLB) but similarly valued. We will take a look at RLJ Lodging Trust (NYSE:RLJ), Amicus Therapeutics, Inc. (NASDAQ:FOLD), Tegna Inc (NYSE:TGNA), and Boyd Gaming Corporation (NYSE:BYD). This group of stocks' market caps are closest to CLB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RLJ,21,192850,-4 FOLD,30,1046575,4 TGNA,26,470360,4 BYD,28,404116,-2 Average,26.25,528475,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $528 million. That figure was $279 million in CLB's case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand RLJ Lodging Trust (NYSE:RLJ) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Core Laboratories N.V. (NYSE:CLB) is even less popular than RLJ. Hedge funds dodged a bullet by taking a bearish stance towards CLB. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CLB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CLB investors were disappointed as the stock returned -24.5% during the same time frame 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 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.