In this article we will check out the progression of hedge fund sentiment towards Copart, Inc. (NASDAQ:CPRT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Copart, Inc. (NASDAQ:CPRT) investors should be aware of a decrease in support from the world’s most elite money managers in recent months. Copart, Inc. (NASDAQ:CPRT) was in 44 hedge funds’ portfolios at the end of June. The all time high for this statistic is 60. Our calculations also showed that CPRT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Aaron Cowen of Suvretta Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Keeping this in mind we’re going to review the fresh hedge fund action surrounding Copart, Inc. (NASDAQ:CPRT).
Do Hedge Funds Think CPRT Is A Good Stock To Buy Now?
At second quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 60 hedge funds with a bullish position in CPRT 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.
Of the funds tracked by Insider Monkey, Kevin Oram and Peter Uddo’s Praesidium Investment Management Company has the most valuable position in Copart, Inc. (NASDAQ:CPRT), worth close to $130.8 million, accounting for 7% of its total 13F portfolio. The second most bullish fund manager is Gobi Capital, led by Bo Shan, holding a $123.4 million position; 7.4% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions encompass Greg Poole’s Echo Street Capital Management, Aaron Cowen’s Suvretta Capital Management and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position Lunia Capital allocated the biggest weight to Copart, Inc. (NASDAQ:CPRT), around 10.77% of its 13F portfolio. Gobi Capital is also relatively very bullish on the stock, earmarking 7.43 percent of its 13F equity portfolio to CPRT.
Because Copart, Inc. (NASDAQ:CPRT) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that slashed their positions entirely heading into Q3. It’s worth mentioning that Renaissance Technologies dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $46.5 million in stock, and Amit Nitin Doshi’s Harbor Spring Capital was right behind this move, as the fund sold off about $25.4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to Copart, Inc. (NASDAQ:CPRT). We will take a look at Lennar Corporation (NYSE:LEN), Ferguson plc (NYSE:FERG), PACCAR Inc (NASDAQ:PCAR), AMETEK, Inc. (NYSE:AME), Unity Software Inc. (NYSE:U), MPLX LP (NYSE:MPLX), and Orange SA (NYSE:ORAN). This group of stocks’ market values are closest to CPRT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LEN | 50 | 1974872 | 1 |
| FERG | 11 | 6877154 | 6 |
| PCAR | 28 | 623669 | 0 |
| AME | 38 | 912985 | 6 |
| U | 29 | 7263688 | -10 |
| MPLX | 11 | 115640 | 3 |
| ORAN | 3 | 13039 | 1 |
| Average | 24.3 | 2540150 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $2540 million. That figure was $992 million in CPRT’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Copart, Inc. (NASDAQ:CPRT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CPRT is 65.6. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on CPRT as the stock returned 6.1% since the end of Q2 (through 10/1) 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.
