Hedge Funds Are Selling Republic Services, Inc. (RSG)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Republic Services, Inc. (NYSE:RSG).

Republic Services, Inc. (NYSE:RSG) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. RSG has seen a decrease in enthusiasm from smart money recently. There were 34 hedge funds in our database with RSG holdings at the end of June. Our calculations also showed that RSG 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. With all of this in mind we’re going to analyze the latest hedge fund action regarding Republic Services, Inc. (NYSE:RSG).

Phillip Gross of Adage Capital

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

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RSG over the last 25 quarters. So, let’s see 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, Cliff Asness’s AQR Capital Management has the most valuable position in Republic Services, Inc. (NYSE:RSG), worth close to $200.1 million, amounting to 0.4% of its total 13F portfolio. On AQR Capital Management’s heels is Chilton Investment Company, managed by Richard Chilton, which holds a $156.5 million position; 3.9% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism comprise Israel Englander’s Millennium Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Mario Gabelli’s GAMCO Investors. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Republic Services, Inc. (NYSE:RSG), around 3.86% of its 13F portfolio. Covalis Capital is also relatively very bullish on the stock, dishing out 2.85 percent of its 13F equity portfolio to RSG.

Because Republic Services, Inc. (NYSE:RSG) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of fund managers that elected to cut their full holdings heading into Q4. At the top of the heap, Louis Bacon’s Moore Global Investments dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $11.1 million in stock, and Andrew Byington’s Appian Way Asset Management was right behind this move, as the fund cut about $8.3 million worth. These transactions are interesting, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Republic Services, Inc. (NYSE:RSG). We will take a look at SVB Financial Group (NASDAQ:SIVB), The Travelers Companies Inc (NYSE:TRV), Kinder Morgan Inc (NYSE:KMI), The Allstate Corporation (NYSE:ALL), DiDi Global Inc. (NYSE:DIDI), Manulife Financial Corporation (NYSE:MFC), and Xilinx, Inc. (NASDAQ:XLNX). This group of stocks’ market values are similar to RSG’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $1295 million. That figure was $1222 million in RSG’s case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand DiDi Global Inc. (NYSE:DIDI) is the least popular one with only 15 bullish hedge fund positions. Republic Services, Inc. (NYSE:RSG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RSG is 44.2. 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. A small number of hedge funds were also right about betting on RSG as the stock returned 10.2% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.

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