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 at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Carlisle Companies, Inc. (NYSE:CSL) and determine whether the smart money was really smart about this stock.
Carlisle Companies, Inc. (NYSE:CSL) investors should be aware of an increase in support from the world's most elite money managers of late. Carlisle Companies, Inc. (NYSE:CSL) was in 38 hedge funds' portfolios at the end of June. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CSL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
At Insider Monkey we scour multiple sources to uncover 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 and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we're going to take a look at the fresh hedge fund action encompassing Carlisle Companies, Inc. (NYSE:CSL).
How are hedge funds trading Carlisle Companies, Inc. (NYSE:CSL)?
At the end of the second quarter, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 65% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CSL over the last 20 quarters. 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, Millennium Management held the most valuable stake in Carlisle Companies, Inc. (NYSE:CSL), which was worth $70.3 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $41.3 million worth of shares. Lodge Hill Capital, Citadel Investment Group, and Two Sigma Advisors 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 Lodge Hill Capital allocated the biggest weight to Carlisle Companies, Inc. (NYSE:CSL), around 9.35% of its 13F portfolio. Cloverdale Capital Management is also relatively very bullish on the stock, designating 4.98 percent of its 13F equity portfolio to CSL.
Consequently, some big names have been driving this bullishness. Cloverdale Capital Management, managed by C. Jonathan Gattman, established the most valuable position in Carlisle Companies, Inc. (NYSE:CSL). Cloverdale Capital Management had $6.7 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $5.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Seth Cogswell's Running Oak Capital, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's now review hedge fund activity in other stocks similar to Carlisle Companies, Inc. (NYSE:CSL). These stocks are The Boston Beer Company Inc (NYSE:SAM), Lear Corporation (NYSE:LEA), Bausch Health Companies Inc.(NYSE:BHC), Kingsoft Cloud Holdings Limited (NASDAQ:KC), Repligen Corporation (NASDAQ:RGEN), GrubHub Inc (NYSE:GRUB), and Federal Realty Investment Trust (NYSE:FRT). This group of stocks' market valuations are closest to CSL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAM,32,804033,8 LEA,41,896134,13 BHC,35,1745572,0 KC,20,62450,20 RGEN,34,688852,13 GRUB,52,1080219,20 FRT,20,76045,-4 Average,33.4,764758,10 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $765 million. That figure was $339 million in CSL's case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Kingsoft Cloud Holdings Limited (NASDAQ:KC) is the least popular one with only 20 bullish hedge fund positions. Carlisle Companies, Inc. (NYSE:CSL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSL 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately CSL wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CSL were disappointed as the stock returned 9.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.