Is Clean Harbors Inc (CLH) A Good Stock To Buy?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Clean Harbors Inc (NYSE:CLH).

Is CLH a good stock to buy? Clean Harbors Inc (NYSE:CLH) has experienced a decrease in hedge fund interest of late. Clean Harbors Inc (NYSE:CLH) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 28. There were 27 hedge funds in our database with CLH holdings at the end of March. Our calculations also showed that CLH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s analyze the new hedge fund action surrounding Clean Harbors Inc (NYSE:CLH).

Do Hedge Funds Think CLH Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in CLH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Impax Asset Management held the most valuable stake in Clean Harbors Inc (NYSE:CLH), which was worth $134.7 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $47.7 million worth of shares. 12th Street Asset Management, Sandler Capital Management, and Millennium Management 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 12th Street Asset Management allocated the biggest weight to Clean Harbors Inc (NYSE:CLH), around 7.02% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, dishing out 4.76 percent of its 13F equity portfolio to CLH.

Judging by the fact that Clean Harbors Inc (NYSE:CLH) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers who sold off their entire stakes last quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the biggest stake of the 750 funds watched by Insider Monkey, totaling about $72.8 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dropped its stock, about $2.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Clean Harbors Inc (NYSE:CLH). We will take a look at Essent Group Ltd (NYSE:ESNT), Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS), SunPower Corporation (NASDAQ:SPWR), RBC Bearings Incorporated (NASDAQ:ROLL), Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX), MSC Industrial Direct Co Inc (NYSE:MSM), and Valmont Industries, Inc. (NYSE:VMI). This group of stocks’ market valuations resemble CLH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $360 million in CLH’s case. SunPower Corporation (NASDAQ:SPWR) is the most popular stock in this table. On the other hand RBC Bearings Incorporated (NASDAQ:ROLL) is the least popular one with only 9 bullish hedge fund positions. Clean Harbors Inc (NYSE:CLH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLH is 74.6. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on CLH as the stock returned 23.2% since the end of Q2 (through 10/22) 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.