Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is CSX Corporation (NASDAQ:CSX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is CSX a good stock to buy now? CSX Corporation (NASDAQ:CSX) has seen an increase in support from the world’s most elite money managers recently. CSX Corporation (NASDAQ:CSX) was in 58 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 63. There were 46 hedge funds in our database with CSX positions at the end of the second quarter. Our calculations also showed that CSX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to go over the key hedge fund action surrounding CSX Corporation (NASDAQ:CSX).
Hedge fund activity in CSX Corporation (NASDAQ:CSX)
At the end of September, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards CSX over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners has the number one position in CSX Corporation (NASDAQ:CSX), worth close to $895.7 million, amounting to 9% of its total 13F portfolio. On Soroban Capital Partners’s heels is Fisher Asset Management, led by Ken Fisher, holding a $359.6 million position; 0.3% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Ken Griffin’s Citadel Investment Group, Robert Pitts’s Steadfast Capital Management and Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management. In terms of the portfolio weights assigned to each position Soroban Capital Partners allocated the biggest weight to CSX Corporation (NASDAQ:CSX), around 9.03% of its 13F portfolio. Sunriver Management is also relatively very bullish on the stock, dishing out 6.46 percent of its 13F equity portfolio to CSX.
As aggregate interest increased, some big names were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in CSX Corporation (NASDAQ:CSX). Point72 Asset Management had $140.2 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also initiated a $105.1 million position during the quarter. The other funds with brand new CSX positions are Dmitry Balyasny’s Balyasny Asset Management, Clint Carlson’s Carlson Capital, and Zach Schreiber’s Point State Capital.
Let’s also examine hedge fund activity in other stocks similar to CSX Corporation (NASDAQ:CSX). We will take a look at Enbridge Inc (NYSE:ENB), BP plc (NYSE:BP), Infosys Limited (NYSE:INFY), Marsh & McLennan Companies, Inc. (NYSE:MMC), The Southern Company (NYSE:SO), Ecolab Inc. (NYSE:ECL), and Intercontinental Exchange Inc (NYSE:ICE). This group of stocks’ market caps are similar to CSX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENB | 25 | 342708 | -3 |
| BP | 30 | 611924 | 3 |
| INFY | 22 | 1427968 | -1 |
| MMC | 35 | 841460 | -3 |
| SO | 25 | 305510 | -13 |
| ECL | 52 | 2270732 | 6 |
| ICE | 64 | 2904596 | 4 |
| Average | 36.1 | 1243557 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1244 million. That figure was $3253 million in CSX’s case. Intercontinental Exchange Inc (NYSE:ICE) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 22 bullish hedge fund positions. CSX Corporation (NASDAQ:CSX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CSX is 80.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on CSX as the stock returned 17.1% since the end of Q3 (through 12/2) 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.
