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Were Hedge Funds Right About Piling Into Carlisle Companies, Inc. (CSL)?

Abigail Fisher

Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the nearly unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Carlisle Companies, Inc. (NYSE:CSL) investors should pay attention to an increase in enthusiasm from smart money of late. CSL was in 25 hedge funds' portfolios at the end of June. There were 22 hedge funds in our database with CSL holdings at the end of the previous quarter. Our calculations also showed that CSL isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.

CSL_oct2019

Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the fresh hedge fund action surrounding Carlisle Companies, Inc. (NYSE:CSL).

What have hedge funds been doing with Carlisle Companies, Inc. (NYSE:CSL)?

Heading into the third quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the first quarter of 2019. By comparison, 16 hedge funds held shares or bullish call options in CSL 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.

Clint Carlson, Carlson Capital

More specifically, Pzena Investment Management was the largest shareholder of Carlisle Companies, Inc. (NYSE:CSL), with a stake worth $53.2 million reported as of the end of March. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $52.3 million. Two Sigma Advisors, AQR Capital Management, and Lodge Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, key hedge funds have been driving this bullishness. Lodge Hill Capital, managed by Clint Murray, assembled the largest position in Carlisle Companies, Inc. (NYSE:CSL). Lodge Hill Capital had $28.7 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $26.6 million investment in the stock during the quarter. The other funds with brand new CSL positions are David Harding's Winton Capital Management, Renaissance Technologies, and Clint Carlson's Carlson Capital.

Let's go over hedge fund activity in other stocks similar to Carlisle Companies, Inc. (NYSE:CSL). These stocks are Masimo Corporation (NASDAQ:MASI), Bunge Limited (NYSE:BG), Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), and Voya Financial Inc (NYSE:VOYA). This group of stocks' market caps resemble CSL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MASI,28,350309,-6 BG,31,693472,-4 MBT,8,448588,-5 VOYA,43,1323923,-2 Average,27.5,704073,-4.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $704 million. That figure was $329 million in CSL's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company (NYSE:MBT) is the least popular one with only 8 bullish hedge fund positions. Carlisle Companies, Inc. (NYSE:CSL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CSL, though not to the same extent, as the stock returned 4% during the third quarter and outperformed the market.

Disclosure: None. This article was originally published at Insider Monkey.

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