Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Crane Co. (NYSE:CR).
Crane Co. (NYSE:CR) was in 22 hedge funds’ portfolios at the end of March. CR shareholders have witnessed a decrease in hedge fund sentiment of late. There were 23 hedge funds in our database with CR positions at the end of the previous quarter. Our calculations also showed that CR isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a gander at the fresh hedge fund action encompassing Crane Co. (NYSE:CR).
What does the smart money think about Crane Co. (NYSE:CR)?
Heading into the second quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CR over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Crane Co. (NYSE:CR) was held by GAMCO Investors, which reported holding $177.3 million worth of stock at the end of March. It was followed by AQR Capital Management with a $67.9 million position. Other investors bullish on the company included Two Sigma Advisors, Point72 Asset Management, and Gardner Russo & Gardner.
Seeing as Crane Co. (NYSE:CR) has experienced a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of funds that elected to cut their positions entirely heading into Q3. Intriguingly, David Costen Haley’s HBK Investments said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $0.9 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also said goodbye to its stock, about $0.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to Crane Co. (NYSE:CR). These stocks are Insperity Inc (NYSE:NSP), Bemis Company, Inc. (NYSE:BMS), Chesapeake Energy Corporation (NYSE:CHK), and MKS Instruments, Inc. (NASDAQ:MKSI). This group of stocks’ market caps are closest to CR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSP | 24 | 458494 | 0 |
| BMS | 29 | 373125 | 3 |
| CHK | 20 | 179653 | 5 |
| MKSI | 22 | 559663 | -8 |
| Average | 23.75 | 392734 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $334 million in CR’s case. Bemis Company, Inc. (NYSE:BMS) is the most popular stock in this table. On the other hand Chesapeake Energy Corporation (NYSE:CHK) is the least popular one with only 20 bullish hedge fund positions. Crane Co. (NYSE:CR) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CR investors were disappointed as the stock returned -7.1% 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
