In this article we will check out the progression of hedge fund sentiment towards Charles River Laboratories International Inc. (NYSE:CRL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Charles River Laboratories International Inc. (NYSE:CRL) investors should be aware of an increase in hedge fund interest lately. Charles River Laboratories International Inc. (NYSE:CRL) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CRL 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 let’s take a glance at the recent hedge fund action encompassing Charles River Laboratories International Inc. (NYSE:CRL).
Do Hedge Funds Think CRL Is A Good Stock To Buy Now?
At the end of September, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CRL over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Melvin Capital Management, managed by Gabriel Plotkin, holds the number one position in Charles River Laboratories International Inc. (NYSE:CRL). Melvin Capital Management has a $154.8 million position in the stock, comprising 0.8% of its 13F portfolio. The second most bullish fund manager is Marshall Wace LLP, led by Paul Marshall and Ian Wace, holding a $124.8 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism contain Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management and Murray Stahl’s Horizon Asset Management. In terms of the portfolio weights assigned to each position Tower House Partners allocated the biggest weight to Charles River Laboratories International Inc. (NYSE:CRL), around 20.66% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, dishing out 4.38 percent of its 13F equity portfolio to CRL.
As industrywide interest jumped, key money managers have been driving this bullishness. Melvin Capital Management, managed by Gabriel Plotkin, assembled the largest position in Charles River Laboratories International Inc. (NYSE:CRL). Melvin Capital Management had $154.8 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $74.8 million position during the quarter. The other funds with brand new CRL positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Jinghua Yan’s TwinBeech Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Charles River Laboratories International Inc. (NYSE:CRL) but similarly valued. We will take a look at Essex Property Trust Inc (NYSE:ESS), MGM Resorts International (NYSE:MGM), Trimble Inc. (NASDAQ:TRMB), KeyCorp (NYSE:KEY), Fresenius Medical Care AG & Co. (NYSE:FMS), Baker Hughes Company (NYSE:BKR), and W.W. Grainger, Inc. (NYSE:GWW). This group of stocks’ market caps are closest to CRL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESS | 21 | 264061 | 0 |
| MGM | 50 | 2740827 | -9 |
| TRMB | 34 | 1814792 | 7 |
| KEY | 36 | 399496 | -4 |
| FMS | 4 | 231694 | -1 |
| BKR | 37 | 1013933 | -3 |
| GWW | 28 | 306060 | -1 |
| Average | 30 | 967266 | -1.6 |
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 $967 million. That figure was $1295 million in CRL’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. (NYSE:FMS) is the least popular one with only 4 bullish hedge fund positions. Charles River Laboratories International Inc. (NYSE:CRL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CRL is 82.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 5.6 percentage points. Unfortunately CRL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CRL were disappointed as the stock returned -11.3% since the end of September (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 many of these stocks already outperformed the market since 2019.
Follow Charles River Laboratories International Inc. (NYSE:CRL)
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Disclosure: None. This article was originally published at Insider Monkey.
