As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Carter’s, Inc. (NYSE:CRI).
Carter’s, Inc. (NYSE:CRI) has experienced an increase in support from the world’s most elite money managers recently. Carter’s, Inc. (NYSE:CRI) was in 24 hedge funds’ portfolios at the end of September. The all time high for this statistic is 46. There were 21 hedge funds in our database with CRI holdings at the end of June. Our calculations also showed that CRI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s review the new hedge fund action regarding Carter’s, Inc. (NYSE:CRI).
Do Hedge Funds Think CRI Is A Good Stock To Buy Now?
At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2021. On the other hand, there were a total of 26 hedge funds with a bullish position in CRI a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Polaris Capital Management was the largest shareholder of Carter’s, Inc. (NYSE:CRI), with a stake worth $45.5 million reported as of the end of September. Trailing Polaris Capital Management was AQR Capital Management, which amassed a stake valued at $43.6 million. Point72 Asset Management, Millennium Management, and Citadel Investment Group 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 Kehrs Ridge Capital allocated the biggest weight to Carter’s, Inc. (NYSE:CRI), around 2.67% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 1.45 percent of its 13F equity portfolio to CRI.
As industrywide interest jumped, key money managers have jumped into Carter’s, Inc. (NYSE:CRI) headfirst. Junto Capital Management, managed by James Parsons, assembled the most outsized position in Carter’s, Inc. (NYSE:CRI). Junto Capital Management had $13.4 million invested in the company at the end of the quarter. Brian Scudieri’s Kehrs Ridge Capital also made a $8.3 million investment in the stock during the quarter. The other funds with brand new CRI positions are Brandon Haley’s Holocene Advisors, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Carter’s, Inc. (NYSE:CRI). We will take a look at Insperity Inc (NYSE:NSP), Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE), Companhia Energetica Minas Gerais (NYSE:CIG), FireEye Inc (NASDAQ:FEYE), Quaker Chemical Corp (NYSE:KWR), Kemper Corporation (NYSE:KMPR), and PNM Resources, Inc. (NYSE:PNM). This group of stocks’ market values are closest to CRI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSP | 18 | 211562 | -2 |
| CERE | 13 | 365384 | -6 |
| CIG | 11 | 66465 | -4 |
| FEYE | 19 | 174446 | -10 |
| KWR | 14 | 137517 | -1 |
| KMPR | 7 | 55874 | -6 |
| PNM | 27 | 718314 | 0 |
| Average | 15.6 | 247080 | -4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $247 million. That figure was $309 million in CRI’s case. PNM Resources, Inc. (NYSE:PNM) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 7 bullish hedge fund positions. Carter’s, Inc. (NYSE:CRI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CRI is 66.2. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on CRI as the stock returned 10.1% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
