Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool in identifying the next stock to invest in.
Stericycle Inc (NASDAQ:SRCL) investors should be aware of an increase in hedge fund sentiment in recent months. Stericycle Inc (NASDAQ:SRCL) was in 34 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with Stericycle Inc (NASDAQ:SRCL) positions at the end of the previous quarter. At the end of this article, we will also compare Stericycle Inc (NASDAQ:SRCL) to other stocks, including Cameron International Corporation (NYSE:CAM), Entergy Corporation (NYSE:ETR), and Noble Energy, Inc. (NYSE:NBL) to get a better sense of its popularity.
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Today there are a multitude of gauges shareholders employ to evaluate publicly traded companies. A pair of the less known gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a superb amount (see the details here).
Now, we’re going to view the recent action surrounding Stericycle Inc (NASDAQ:SRCL).
How are hedge funds trading Stericycle Inc (NASDAQ:SRCL)?
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 89% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, holds the biggest position in Stericycle Inc (NASDAQ:SRCL). Healthcor Management LP has a $108 million position in the stock, comprising 6.1% of its 13F portfolio. The second most bullish fund manager is Impax Asset Management, led by Ian Simm, holding an $43.7 million position; the fund has 3% of its 13F portfolio invested in the stock. The remaining peers with similar optimism include Greg Poole’s Echo Street Capital Management, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Daniel S. Och’s OZ Management.
Consequently, key hedge funds have been driving this bullishness. Blue Mountain Capital made a $33 million investment in the stock during the quarter. The other funds with new positions in the stock are OZ Management, Jacob Gottlieb’s Visium Asset Management, and D E Shaw.
Let’s also examine hedge fund activity in other stocks similar to Stericycle Inc (NASDAQ:SRCL). We will take a look at Cameron International Corporation (NYSE:CAM), Entergy Corporation (NYSE:ETR), Noble Energy, Inc. (NYSE:NBL), and Hanesbrands Inc. (NYSE:HBI). This group of stocks’ market values is similar to Stericycle Inc (NASDAQ:SRCL)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAM | 49 | 1775345 | 12 |
| ETR | 29 | 683702 | 10 |
| NBL | 44 | 1897931 | 7 |
| HBI | 32 | 1072465 | -2 |
As you can see, these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1.36 billion. That figure was $413 million in Stericycle Inc (NASDAQ:SRCL)’s case. Cameron International Corporation (NYSE:CAM) is the most popular stock in this table. On the other hand, Entergy Corporation (NYSE:ETR) is the least popular one with only 29 bullish hedge fund positions. Stericycle Inc (NASDAQ:SRCL) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Cameron International Corporation (NYSE:CAM) might be a better candidate to consider a long position.
