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 (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Carlisle Companies, Inc. (NYSE:CSL).
Carlisle Companies, Inc. (NYSE:CSL) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2019. CSL has experienced a decrease in hedge fund interest of late. There were 34 hedge funds in our database with CSL positions at the end of the previous quarter. Our calculations also showed that CSL 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).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ray Dalio of Bridgewater Associates
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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 we’re going to take a look at the key hedge fund action regarding Carlisle Companies, Inc. (NYSE:CSL).
What does smart money think about Carlisle Companies, Inc. (NYSE:CSL)?
Heading into the first quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from one quarter earlier. On the other hand, there were a total of 21 hedge funds with a bullish position in CSL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Anand Parekh’s Alyeska Investment Group has the biggest position in Carlisle Companies, Inc. (NYSE:CSL), worth close to $66.5 million, corresponding to 0.9% of its total 13F portfolio. On Alyeska Investment Group’s heels is Cliff Asness of AQR Capital Management, with a $66.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Richard S. Pzena’s Pzena Investment Management. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to Carlisle Companies, Inc. (NYSE:CSL), around 9.13% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, earmarking 4.07 percent of its 13F equity portfolio to CSL.
Due to the fact that Carlisle Companies, Inc. (NYSE:CSL) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds that elected to cut their positions entirely by the end of the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of all the hedgies followed by Insider Monkey, comprising an estimated $46.2 million in stock, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital was right behind this move, as the fund sold off about $26.5 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 8 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Carlisle Companies, Inc. (NYSE:CSL) but similarly valued. We will take a look at Iron Mountain Incorporated (NYSE:IRM), AEGON N.V. (NYSE:AEG), Fortune Brands Home & Security Inc (NYSE:FBHS), and Mobile TeleSystems PJSC (NYSE:MBT). All of these stocks’ market caps match CSL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IRM | 17 | 42090 | 1 |
| AEG | 6 | 29963 | -1 |
| FBHS | 34 | 561867 | 0 |
| MBT | 13 | 478752 | -1 |
| Average | 17.5 | 278168 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $406 million in CSL’s case. Fortune Brands Home & Security Inc (NYSE:FBHS) is the most popular stock in this table. On the other hand AEGON N.V. (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. Carlisle Companies, Inc. (NYSE:CSL) 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 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately CSL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CSL were disappointed as the stock returned -25.6% 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.
