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Was The Smart Money Right About Carrier Global Corporation (CARR)?

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  • CARR

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Carrier Global Corporation (NYSE:CARR) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Carrier Global Corporation (NYSE:CARR) has experienced a decrease in enthusiasm from smart money of late. Carrier Global Corporation (NYSE:CARR) was in 46 hedge funds' portfolios at the end of June. The all time high for this statistic is 52. There were 51 hedge funds in our database with CARR holdings at the end of March. Our calculations also showed that CARR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Donald Sussman Paloma Partners
Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Now we're going to view the key hedge fund action surrounding Carrier Global Corporation (NYSE:CARR).

Do Hedge Funds Think CARR Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 46 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. By comparison, 44 hedge funds held shares or bullish call options in CARR a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Diamond Hill Capital held the most valuable stake in Carrier Global Corporation (NYSE:CARR), which was worth $275.1 million at the end of the second quarter. On the second spot was Gates Capital Management which amassed $182 million worth of shares. Lansdowne Partners, AQR Capital Management, and Adage 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 Lansdowne Partners allocated the biggest weight to Carrier Global Corporation (NYSE:CARR), around 7.01% of its 13F portfolio. Gates Capital Management is also relatively very bullish on the stock, designating 5.25 percent of its 13F equity portfolio to CARR.

Judging by the fact that Carrier Global Corporation (NYSE:CARR) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few hedge funds who were dropping their entire stakes by the end of the second quarter. It's worth mentioning that John Smith Clark's Southpoint Capital Advisors said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, worth close to $438 million in stock, and Patrick Degorce's Theleme Partners was right behind this move, as the fund said goodbye to about $122.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 5 funds by the end of the second quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Carrier Global Corporation (NYSE:CARR) but similarly valued. These stocks are Synopsys, Inc. (NASDAQ:SNPS), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), DexCom, Inc. (NASDAQ:DXCM), Kinder Morgan Inc (NYSE:KMI), DuPont de Nemours Inc (NYSE:DD), and Electronic Arts Inc. (NASDAQ:EA). This group of stocks' market caps match CARR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNPS,41,2057258,7 ERIC,19,228837,0 BBVA,9,274525,2 DXCM,49,1634192,-7 KMI,38,1032764,0 DD,57,1653192,8 EA,56,2022602,12 Average,38.4,1271910,3.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $1272 million. That figure was $1854 million in CARR's case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) is the least popular one with only 9 bullish hedge fund positions. Carrier Global Corporation (NYSE:CARR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CARR is 65.1. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on CARR as the stock returned 8.9% since the end of Q2 (through 11/5) 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.