Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Charah Solutions, Inc. (NYSE:CHRA) in this article.
Is Charah Solutions, Inc. (NYSE:CHRA) the right investment to pursue these days? Investors who are in the know were in an optimistic mood. The number of long hedge fund bets inched up by 2 recently. Charah Solutions, Inc. (NYSE:CHRA) was in 4 hedge funds’ portfolios at the end of March. The all time high for this statistic is 8. Our calculations also showed that CHRA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 2 hedge funds in our database with CHRA holdings at the end of December.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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. Now let’s check out the recent hedge fund action surrounding Charah Solutions, Inc. (NYSE:CHRA).
Do Hedge Funds Think CHRA Is A Good Stock To Buy Now?
At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CHRA over the last 23 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Portolan Capital Management, managed by George McCabe, holds the biggest position in Charah Solutions, Inc. (NYSE:CHRA). Portolan Capital Management has a $14.3 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is North Run Capital, managed by Thomas Ellis and Todd Hammer, which holds a $12 million position; the fund has 8.9% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies and . In terms of the portfolio weights assigned to each position North Run Capital allocated the biggest weight to Charah Solutions, Inc. (NYSE:CHRA), around 8.87% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, setting aside 1.12 percent of its 13F equity portfolio to CHRA.
As industrywide interest jumped, specific money managers have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the largest position in Charah Solutions, Inc. (NYSE:CHRA). Two Sigma Advisors had $0.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.1 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks similar to Charah Solutions, Inc. (NYSE:CHRA). We will take a look at Mediwound Ltd (NASDAQ:MDWD), Molecular Data Inc. (NASDAQ:MKD), California BanCorp (NASDAQ:CALB), Oconee Federal Financial Corp. (NASDAQ:OFED), China Automotive Systems, Inc. (NASDAQ:CAAS), Dynagas LNG Partners LP (NYSE:DLNG), and Western Copper and Gold Corporation (NYSE:WRN). All of these stocks’ market caps are similar to CHRA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDWD | 4 | 7751 | 2 |
| MKD | 3 | 832 | 1 |
| CALB | 4 | 6061 | 1 |
| OFED | 1 | 299 | -1 |
| CAAS | 1 | 2401 | -4 |
| DLNG | 1 | 60 | 1 |
| WRN | 2 | 852 | -1 |
| Average | 2.3 | 2608 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.3 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $27 million in CHRA’s case. Mediwound Ltd (NASDAQ:MDWD) is the most popular stock in this table. On the other hand Oconee Federal Financial Corp. (NASDAQ:OFED) is the least popular one with only 1 bullish hedge fund positions. Charah Solutions, Inc. (NYSE:CHRA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHRA is 72. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on CHRA as the stock returned 23.5% since the end of Q1 (through 6/11) 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.
