Hedge Fund Sentiment Is Stagnant On Republic Services, Inc. (RSG)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Republic Services, Inc. (NYSE:RSG).

Republic Services, Inc. (NYSE:RSG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 36 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that RSG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare RSG to other stocks including Companhia Paranaense de Energia – COPEL (NYSE:ELP), ArcelorMittal (NYSE:MT), and Palo Alto Networks Inc (NYSE:PANW) to get a better sense of its popularity.

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Richard Chilton of Chilton Investment Company

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 battery 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 let’s take a gander at the latest hedge fund action surrounding Republic Services, Inc. (NYSE:RSG).

Do Hedge Funds Think RSG Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in RSG a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

More specifically, AQR Capital Management was the largest shareholder of Republic Services, Inc. (NYSE:RSG), with a stake worth $158.6 million reported as of the end of March. Trailing AQR Capital Management was Chilton Investment Company, which amassed a stake valued at $131.6 million. Adage Capital Management, Two Sigma Advisors, and D E Shaw 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 Chilton Investment Company allocated the biggest weight to Republic Services, Inc. (NYSE:RSG), around 3.62% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, setting aside 1.54 percent of its 13F equity portfolio to RSG.

Judging by the fact that Republic Services, Inc. (NYSE:RSG) has witnessed bearish sentiment from the smart money, it’s safe to say that there were a few funds who sold off their positions entirely heading into Q2. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $12.1 million in stock. David Harding’s fund, Winton Capital Management, also dumped its stock, about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Republic Services, Inc. (NYSE:RSG) but similarly valued. These stocks are Companhia Paranaense de Energia – COPEL (NYSE:ELP), ArcelorMittal (NYSE:MT), Palo Alto Networks Inc (NYSE:PANW), V.F. Corporation (NYSE:VFC), NatWest Group plc (NYSE:NWG), McKesson Corporation (NYSE:MCK), and AutoZone, Inc. (NYSE:AZO). This group of stocks’ market caps are similar to RSG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1250 million. That figure was $1074 million in RSG’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia – COPEL (NYSE:ELP) is the least popular one with only 5 bullish hedge fund positions. Republic Services, Inc. (NYSE:RSG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RSG is 60.5. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on RSG, though not to the same extent, as the stock returned 9.5% since Q1 (through June 25th) and outperformed the market as well.

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