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 have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider Catalent Inc (NYSE:CTLT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Catalent Inc (NYSE:CTLT) has seen a decrease in hedge fund sentiment of late. Catalent Inc (NYSE:CTLT) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 40. Our calculations also showed that CTLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a gander at the new hedge fund action encompassing Catalent Inc (NYSE:CTLT).
Kamran Moghtaderi of Eversept Partners
Do Hedge Funds Think CTLT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 40 hedge funds with a bullish position in CTLT a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Third Point held the most valuable stake in Catalent Inc (NYSE:CTLT), which was worth $183 million at the end of the third quarter. On the second spot was Viking Global which amassed $154.8 million worth of shares. Palestra Capital Management, Farallon Capital, and Millennium Management 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 Tower House Partners allocated the biggest weight to Catalent Inc (NYSE:CTLT), around 27.05% of its 13F portfolio. Highline Capital Management is also relatively very bullish on the stock, designating 5.7 percent of its 13F equity portfolio to CTLT.
Due to the fact that Catalent Inc (NYSE:CTLT) has faced a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of funds that slashed their full holdings in the third quarter. It’s worth mentioning that Jeremy Green’s Redmile Group cut the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $33.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $22.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Catalent Inc (NYSE:CTLT) but similarly valued. We will take a look at Ginkgo Bioworks Holdings Inc. (NYSE:DNA), Royal Caribbean Cruises Ltd. (NYSE:RCL), Magna International Inc. (NYSE:MGA), CNH Industrial NV (NYSE:CNHI), Extra Space Storage, Inc. (NYSE:EXR), Northern Trust Corporation (NASDAQ:NTRS), and XP Inc. (NASDAQ:XP). This group of stocks’ market caps match CTLT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNA | 32 | 5696252 | 32 |
| RCL | 35 | 575404 | -7 |
| MGA | 29 | 444703 | -10 |
| CNHI | 25 | 909259 | 1 |
| EXR | 27 | 405036 | 6 |
| NTRS | 34 | 535076 | 2 |
| XP | 28 | 674196 | 3 |
| Average | 30 | 1319989 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $1320 million. That figure was $1114 million in CTLT’s case. Royal Caribbean Cruises Ltd. (NYSE:RCL) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Catalent Inc (NYSE:CTLT) is more popular among hedge funds. Our overall hedge fund sentiment score for CTLT is 81.5. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately CTLT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CTLT were disappointed as the stock returned -3.3% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Catalent Inc. (NYSE:CTLT)
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Disclosure: None. This article was originally published at Insider Monkey.
