Five Environmental Stocks to Hold This Quarter

Today, climate change is not just a hypothesis, but a harsh reality that is changing many lives. As we become more conscious of our footprint, many investors feel they have a moral responsibility to ensure that their capital is employed in ventures that do not exploit and deteriorate the fragile intertwining fabric of the environment. This led us to explore the best investment opportunities in the sector and we have come up with a list of five companies that have the vote of confidence from some of the best investors in the world.

In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8,000 funds in operation at present, Insider Monkey looks at only the aristocrats of this group, around 730 funds. Contrary to popular belief, Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge, not because they are not good at picking stocks on the long side of their portfolios. Hedge funds did in fact manage to outperform the market on the long side of their portfolios. In fact, the 15 most popular small-cap stocks among hedge funds has returned 102% since the end of August 2012, beat the S&P 500 Index by 53 percentage points (see the details here).

#5 Clean Harbors Inc (NYSE:CLH)

Investors with Long Positions (as of September 30): 22

Aggregate Value of Investors’ Holdings (as of September 30): $293.18 Million

While the total number of hedge funds’ holding Clean Harbors Inc (NYSE:CLH) in their portfolios increased by three during the third trimester the aggregate value of investor holdings slid by 18%. The stock price of the $2.37 billion provider of environmental, energy and industrial services depreciated by 18.6% during the same period. The main reason for this has been the rout in the oil price as three of the company’s six segments, namely Kleen Performance Products (KSP), Lodging Services, and Oil and Gas Field Services are highly correlated with crude prices. PAR Capital Management, led by Paul Reeder and Edward Shapiro, owns about 1.97 million shares of Clean Harbors Inc (NYSE:CLH).

#4 Waste Connections, Inc. (NYSE:WCN)

Investors with Long Positions (as of September 30): 23

Aggregate Value of Investors’ Holdings (as of September 30): $324.31 Million

So far this year the stock price of the $6.69 billion municipal solid waste services company has surged by almost 27%. Although the total number of funds backing Waste Connections, Inc. (NYSE:WCN) inched up by one during the July-September period, the aggregate value of these holdings dropped by about 6%. Stifel recently has reiterated its ‘Buy’ rating for the company and raised the price target to $60 from $58. John Lykouretzos‘ Hoplite Capital Management is the largest stockholder of Waste Connections, Inc. (NYSE:WCN) within our database holding some 1.47 million shares.

#3 Republic Services, Inc. (NYSE:RSG)

Investors with Long Positions (as of September 30): 30

Aggregate Value of Investors’ Holdings (as of September 30): $373.67 Million

Despite the total number of hedge funds holding Republic Services, Inc. (NYSE:RSG) remaining unchanged during the third quarter, the aggregate value of investors’ holdings fell by 2%. The share price appreciated by 4.5% during this period and is up by over 10% year-to-date. In its financial results for the third quarter, Republic Services, Inc. (NYSE:RSG) delivered EPS of $0.53, in line with the estimates, while revenues of $2.34 billion came in $10 million lighter than the expectations. Mario Gabelli‘s GAMCO Investors holds about 3.0 million shares of Republic Services, Inc. (NYSE:RSG), according to its latest 13F filing.

#2 Waste Management, Inc. (NYSE:WM)

Investors with Long Positions (as of September 30): 31

Aggregate Value of Investors’ Holdings (as of September 30): $135.94 Million

Waste Management, Inc. (NYSE:WM) recently has announced plans to raise the quarterly dividend by 7% to $0.41 per share. The new yield stands at 3.2% at the current trading levels. Moreover, the company also authorized a $1 billion share repurchase program that replaces the ongoing program for the same amount. While the number of hedge funds betting on Waste Management, Inc. (NYSE:WM) remained unchanged during the third trimester, the aggregate value of these holdings appreciated by about 5%. So far this year, Waste Management’s stock has posted gains of over 5%. Bill & Melinda Gates Foundation Trust, managed by Michael Larson, holds 18.63 million shares of Waste Management, Inc. (NYSE:WM) as of the end of September.

#1 Stericycle Inc (NASDAQ:SRCL)

Investors with Long Positions (as of September 30): 34

Aggregate Value of Investors’ Holdings (as of September 30): $413.25 Million

During the third quarter smart money investors were bullish on Stericycle Inc (NASDAQ:SRCL), with the number of funds backing the company increasing by 16 and the subsequent aggregate value of holdings appreciating by $283 million. However, the company delivered disappointing results for the third quarter, missing the top- and bottom-line estimates owing to weak foreign currencies, lower hazardous waste volumes and higher expenses. Consequently, Stericycle Inc (NASDAQ:SRCL)’s shares fell by almost 19%. HealthCor Management, led by Arthur B. Cohen and Joseph Healey reported a 775,000-share stake of the company in its latest 13F filing.

Disclosure: None