"Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.," said Clearbridge Investments in its market commentary. We aren't sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That's why we believe it would be worthwhile to take a look at the hedge fund sentiment on US Ecology Inc. (NASDAQ:ECOL) in order to identify whether reputable and successful top money managers continue to believe in its potential.
US Ecology Inc. (NASDAQ:ECOL) was in 11 hedge funds' portfolios at the end of the fourth quarter of 2018. ECOL has experienced an increase in enthusiasm from smart money of late. There were 10 hedge funds in our database with ECOL holdings at the end of the previous quarter. Our calculations also showed that ECOL isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a glance at the fresh hedge fund action surrounding US Ecology Inc. (NASDAQ:ECOL).
What does the smart money think about US Ecology Inc. (NASDAQ:ECOL)?
At Q4's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in ECOL 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.
Among these funds, Renaissance Technologies held the most valuable stake in US Ecology Inc. (NASDAQ:ECOL), which was worth $6.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $0.8 million worth of shares. Moreover, Two Sigma Advisors, Millennium Management, and AQR Capital Management were also bullish on US Ecology Inc. (NASDAQ:ECOL), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Holocene Advisors, managed by Brandon Haley, established the most valuable position in US Ecology Inc. (NASDAQ:ECOL). Holocene Advisors had $0.4 million invested in the company at the end of the quarter. David Harding's Winton Capital Management also initiated a $0.3 million position during the quarter. The following funds were also among the new ECOL investors: Hoon Kim's Quantinno Capital and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's also examine hedge fund activity in other stocks similar to US Ecology Inc. (NASDAQ:ECOL). We will take a look at WMS Industries Inc. (NYSE:WMS), Summit Materials Inc (NYSE:SUM), Seaspan Corporation (NYSE:SSW), and Rush Enterprises, Inc. (NASDAQ:RUSHB). All of these stocks' market caps are closest to ECOL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WMS,17,298539,0 SUM,20,408215,-1 SSW,12,335655,4 RUSHB,3,31783,-2 Average,13,268548,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $10 million in ECOL's case. Summit Materials Inc (NYSE:SUM) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 3 bullish hedge fund positions. US Ecology Inc. (NASDAQ:ECOL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ECOL wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); ECOL investors were disappointed as the stock returned -5.5% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.