Is Carter’s, Inc. (CRI) A Good Stock To Buy?

Is Carter’s, Inc. (NYSE:CRI) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

Carter’s shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 46 hedge funds’ portfolios at the end of September. At the end of this article we will also compare CRI to other stocks, including Liberty Property Trust (NYSE:LPT), Allison Transmission Holdings Inc (NYSE:ALSN), and Embraer SA (ADR) (NYSE:ERJ) to get a better sense of its popularity.

At the moment there are a lot of methods stock traders use to assess their holdings. A pair of the most useful methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat the S&P 500 by a healthy amount (see the details here).

With all of this in mind, let’s go over the latest action surrounding Carter’s, Inc. (NYSE:CRI).

How are hedge funds trading Carter’s, Inc. (NYSE:CRI)?

Heading into Q4, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Hound Partners, managed by Jonathan Auerbach, holds the number one position in Carter’s, Inc. (NYSE:CRI). Hound Partners has a $310.6 million position in the stock, comprising 6.7% of its 13F portfolio. The second largest stake is held by Valinor Management LLC, managed by David Gallo, which holds a $142.3 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Other peers that are bullish comprise Panayotis Takis Sparaggis’ Alkeon Capital Management, John Smith Clark’s Southpoint Capital Advisors and Cliff Asness’ AQR Capital Management.

Because Carter’s, Inc. (NYSE:CRI) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of money managers who sold off their positions entirely heading into Q4. Intriguingly, Robert Pohly’s Samlyn Capital cut the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at close to $85.3 million in stock, and Jason Karp’s Tourbillon Capital Partners was right behind this move, as the fund dumped about $37.2 million worth of shares.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Carter’s, Inc. (NYSE:CRI) but similarly valued. These stocks are Liberty Property Trust (NYSE:LPT), Allison Transmission Holdings Inc (NYSE:ALSN), Embraer SA (ADR) (NYSE:ERJ), and Transocean LTD (NYSE:RIG). This group of stocks’ market caps are closest to CRI’s market cap.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $1.06 billion in CRI’s case. Allison Transmission Holdings Inc (NYSE:ALSN) is the most popular stock in this table with 40 funds holding shares. On the other hand Embraer SA (ADR) (NYSE:ERJ) is the least popular one. Compared to these stocks, Carter’s, Inc. (NYSE:CRI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.