Hedge Funds Cashing Out Of Carrier Global Corporation (CARR)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Carrier Global Corporation (NYSE:CARR) based on those filings.

Carrier Global Corporation (NYSE:CARR) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. Carrier Global Corporation (NYSE:CARR) was in 51 hedge funds’ portfolios at the end of March. The all time high for this statistic is 52. There were 52 hedge funds in our database with CARR positions at the end of the fourth quarter. Our calculations also showed that CARR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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.

Jeffrey Gates of Gates Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 review the recent hedge fund action regarding Carrier Global Corporation (NYSE:CARR).

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

At Q1’s end, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the fourth quarter of 2020. By comparison, 3 hedge funds held shares or bullish call options in CARR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, Southpoint Capital Advisors held the most valuable stake in Carrier Global Corporation (NYSE:CARR), which was worth $438 million at the end of the fourth quarter. On the second spot was Diamond Hill Capital which amassed $233.9 million worth of shares. Gates Capital Management, Lansdowne Partners, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Southpoint Capital Advisors allocated the biggest weight to Carrier Global Corporation (NYSE:CARR), around 7.28% of its 13F portfolio. Madison Avenue Partners is also relatively very bullish on the stock, designating 6.41 percent of its 13F equity portfolio to CARR.

Judging by the fact that Carrier Global Corporation (NYSE:CARR) has faced bearish sentiment from hedge fund managers, we can see that there exists a select few money managers that slashed their positions entirely in the first quarter. Interestingly, Kerr Neilson’s Platinum Asset Management said goodbye to the biggest position of all the hedgies followed by Insider Monkey, totaling close to $83.6 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also dumped its stock, about $9.8 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds in the first quarter.

Let’s go over hedge fund activity in other stocks similar to Carrier Global Corporation (NYSE:CARR). We will take a look at Canadian Natural Resources Limited (NYSE:CNQ), Match Group, Inc. (NASDAQ:MTCH), Southwest Airlines Co. (NYSE:LUV), Prudential Financial Inc (NYSE:PRU), Roblox Corporation (NYSE:RBLX), Cintas Corporation (NASDAQ:CTAS), and Xcel Energy Inc (NASDAQ:XEL). All of these stocks’ market caps are closest to CARR’s market cap.

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As you can see these stocks had an average of 40.3 hedge funds with bullish positions and the average amount invested in these stocks was $1289 million. That figure was $2167 million in CARR’s case. Match Group, Inc. (NASDAQ:MTCH) is the most popular stock in this table. On the other hand Xcel Energy Inc (NASDAQ:XEL) is the least popular one with only 18 bullish hedge fund positions. Carrier Global Corporation (NYSE:CARR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CARR is 66.4. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on CARR, though not to the same extent, as the stock returned 7% since Q1 (through June 18th) and outperformed the market as well.

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