Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ChampionX Corporation (NYSE:CHX) to find out whether there were any major changes in hedge funds’ views.
ChampionX Corporation (NYSE:CHX) has seen a decrease in hedge fund interest recently. ChampionX Corporation (NYSE:CHX) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 30. There were 30 hedge funds in our database with CHX holdings at the end of December. Our calculations also showed that CHX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Do Hedge Funds Think CHX Is A Good Stock To Buy Now?
At first quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the fourth quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in CHX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Gates Capital Management held the most valuable stake in ChampionX Corporation (NYSE:CHX), which was worth $121.8 million at the end of the fourth quarter. On the second spot was Paradice Investment Management which amassed $99.1 million worth of shares. Iridian Asset Management, D E Shaw, and East Side Capital (RR Partners) 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 Lafitte Capital Management allocated the biggest weight to ChampionX Corporation (NYSE:CHX), around 7.26% of its 13F portfolio. East Side Capital (RR Partners) is also relatively very bullish on the stock, earmarking 4.81 percent of its 13F equity portfolio to CHX.
Judging by the fact that ChampionX Corporation (NYSE:CHX) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that slashed their full holdings last quarter. At the top of the heap, Clint Carlson’s Carlson Capital cut the largest stake of all the hedgies followed by Insider Monkey, comprising an estimated $12 million in stock. Naval Khera’s fund, Brightline Capital, also dumped its stock, about $3.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to ChampionX Corporation (NYSE:CHX). We will take a look at The Hain Celestial Group, Inc. (NASDAQ:HAIN), Selective Insurance Group (NASDAQ:SIGI), Quaker Chemical Corp (NYSE:KWR), ICU Medical, Inc. (NASDAQ:ICUI), WESCO International, Inc. (NYSE:WCC), Cricut, Inc. (NASDAQ:CRCT), and Medallia, Inc. (NYSE:MDLA). This group of stocks’ market caps match CHX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HAIN | 23 | 933951 | 0 |
| SIGI | 13 | 60120 | -2 |
| KWR | 18 | 184447 | 5 |
| ICUI | 26 | 381958 | 4 |
| WCC | 28 | 1026615 | 5 |
| CRCT | 12 | 45232 | 12 |
| MDLA | 19 | 296296 | -2 |
| Average | 19.9 | 418374 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $418 million. That figure was $589 million in CHX’s case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand Cricut, Inc. (NASDAQ:CRCT) is the least popular one with only 12 bullish hedge fund positions. ChampionX Corporation (NYSE:CHX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHX is 81. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on CHX, though not to the same extent, as the stock returned 14.4% since Q1 (through July 9th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
