There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).
Is C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) a worthy investment today? Money managers are taking an optimistic view. The number of bullish hedge fund positions inched up by 3 recently. Our calculations also showed that CHRW isn’t among the 30 most popular stocks among hedge funds. CHRW was in 30 hedge funds’ portfolios at the end of March. There were 27 hedge funds in our database with CHRW positions at the end of the previous quarter.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the fresh hedge fund action regarding C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).
Hedge fund activity in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CHRW over the last 15 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). AQR Capital Management has a $95.1 million position in the stock, comprising 0.1% of its 13F portfolio. On AQR Capital Management’s heels is Renaissance Technologies, managed by Jim Simons, which holds a $61.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions encompass Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Israel Englander’s Millennium Management.
As one would reasonably expect, key hedge funds have been driving this bullishness. Carlson Capital, managed by Clint Carlson, initiated the biggest position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). Carlson Capital had $18 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $8 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Jeffrey Talpins’s Element Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s also examine hedge fund activity in other stocks similar to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). These stocks are Nomura Holdings, Inc. (NYSE:NMR), CarMax Inc (NYSE:KMX), NRG Energy Inc (NYSE:NRG), and Textron Inc. (NYSE:TXT). This group of stocks’ market values are similar to CHRW’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NMR | 5 | 36674 | 0 |
| KMX | 29 | 1641895 | 1 |
| NRG | 40 | 1792102 | -9 |
| TXT | 24 | 665699 | -4 |
| Average | 24.5 | 1034093 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $1034 million. That figure was $408 million in CHRW’s case. NRG Energy Inc (NYSE:NRG) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 5 bullish hedge fund positions. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CHRW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CHRW were disappointed as the stock returned -9.4% during the same 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
