We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Clean Harbors Inc (NYSE:CLH) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Clean Harbors Inc (NYSE:CLH) worth your attention right now? Money managers are turning less bullish. The number of long hedge fund bets dropped by 4 lately. Our calculations also showed that CLH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). CLH was in 24 hedge funds’ portfolios at the end of December. There were 28 hedge funds in our database with CLH holdings at the end of the previous quarter.
At the moment there are several formulas stock traders put to use to assess their holdings. Two of the less known formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the top money managers can beat the market by a very impressive margin (see the details here).
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the fresh hedge fund action regarding Clean Harbors Inc (NYSE:CLH).
What does smart money think about Clean Harbors Inc (NYSE:CLH)?
Heading into the first quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in CLH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the number one position in Clean Harbors Inc (NYSE:CLH), worth close to $161 million, corresponding to 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is Ian Simm of Impax Asset Management, with a $67 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining peers that are bullish consist of Principal Global Investors’s Columbus Circle Investors, Cliff Asness’s AQR Capital Management and Alexander Mitchell’s Scopus Asset Management. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to Clean Harbors Inc (NYSE:CLH), around 3.99% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, setting aside 2.15 percent of its 13F equity portfolio to CLH.
Seeing as Clean Harbors Inc (NYSE:CLH) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of money managers who were dropping their positions entirely in the third quarter. It’s worth mentioning that Mark Coe’s Intrinsic Edge Capital cut the biggest position of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $8.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital 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 4 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Clean Harbors Inc (NYSE:CLH) but similarly valued. We will take a look at First Financial Bankshares Inc (NASDAQ:FFIN), Companhia Siderurgica Nacional (NYSE:SID), Cirrus Logic, Inc. (NASDAQ:CRUS), and MAXIMUS, Inc. (NYSE:MMS). This group of stocks’ market valuations match CLH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FFIN | 13 | 9578 | -3 |
| SID | 6 | 18104 | -1 |
| CRUS | 25 | 486049 | -1 |
| MMS | 24 | 210310 | -2 |
| Average | 17 | 181010 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $474 million in CLH’s case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 6 bullish hedge fund positions. Clean Harbors Inc (NYSE:CLH) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately CLH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLH were disappointed as the stock returned -44.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
