Here is What Hedge Funds Think About Catalent Inc (CTLT)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Catalent Inc (NYSE:CTLT).

Catalent Inc (NYSE:CTLT)’s stock lost 17% in the third quarter and as investors started to lose confidence in the stock, the number of funds with long positions (among those we track) declined by three. CTLT was in 14 hedge funds’ portfolios at the end of September. At the end of this article we will also compare CTLT to other stocks, including HSN, Inc. (NASDAQ:HSNI), New Residential Investment Corp (NYSE:NRZ), and PrivateBancorp Inc (NASDAQ:PVTB) to get a better sense of its popularity.

In the eyes of most market participants, hedge funds are seen as slow, outdated investment tools of the past. While there are greater than 8000 funds trading today, Our experts choose to focus on the masters of this club, about 700 funds. Most estimates calculate that this group of people shepherd most of the smart money’s total capital, and by keeping an eye on their top picks, Insider Monkey has come up with numerous investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, let’s take a glance at the fresh action surrounding Catalent Inc (NYSE:CTLT).

What have hedge funds been doing with Catalent Inc (NYSE:CTLT)?

Heading into Q4, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 18% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Aisling Capital, managed by Dennis Purcell, holds the number one position in Catalent Inc (NYSE:CTLT). Aisling Capital has a $17.4 million position in the stock, comprising 3.1% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, with a $8.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish include Israel Englander’s Millennium Management, Peter Muller’s PDT Partners, and Glenn Russell Dubin’s Highbridge Capital Management.

Judging by the fact that Catalent Inc (NYSE:CTLT) has experienced falling interest from hedge fund managers, we can see that there exists a select few money managers who were dropping their full holdings heading into Q4. It’s worth mentioning that Ken Griffin’s Citadel Investment Group said goodbye to the largest investment of the 700 funds followed by Insider Monkey, comprising about $49.1 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $2.1 million worth of shares. These transactions are interesting, as total hedge fund interest was cut by 3 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Catalent Inc (NYSE:CTLT). We will take a look at HSN, Inc. (NASDAQ:HSNI), New Residential Investment Corp (NYSE:NRZ), PrivateBancorp Inc (NASDAQ:PVTB), and Federated Investors Inc (NYSE:FII). This group of stocks’ market valuations resemble CTLT’s market valuation.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $310 million. That figure was $46 million in CTLT’s case. New Residential Investment Corp (NYSE:NRZ) is the most popular stock in this table. On the other hand HSN, Inc. (NASDAQ:HSNI) is the least popular one with only 10 bullish hedge fund positions. Catalent Inc (NYSE:CTLT) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NRZ might be a better candidate to consider a long position.