Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Republic Services, Inc. (NYSE:RSG) based on that data.
Is RSG stock a buy? Republic Services, Inc. (NYSE:RSG) has experienced a decrease in support from the world’s most elite money managers recently. Republic Services, Inc. (NYSE:RSG) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 37. There were 37 hedge funds in our database with RSG holdings at the end of September. Our calculations also showed that RSG isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 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.
Richard Chilton of Chilton Investment Company
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Now we’re going to take a peek at the latest hedge fund action regarding Republic Services, Inc. (NYSE:RSG).
Do Hedge Funds Think RSG Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RSG over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Republic Services, Inc. (NYSE:RSG), with a stake worth $159.2 million reported as of the end of December. Trailing AQR Capital Management was Chilton Investment Company, which amassed a stake valued at $128.2 million. D E Shaw, GAMCO Investors, 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 Chilton Investment Company allocated the biggest weight to Republic Services, Inc. (NYSE:RSG), around 3.66% of its 13F portfolio. Quaero Capital is also relatively very bullish on the stock, setting aside 1.23 percent of its 13F equity portfolio to RSG.
Because Republic Services, Inc. (NYSE:RSG) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that slashed their full holdings heading into Q1. Intriguingly, Aaron Cowen’s Suvretta Capital Management cut the biggest position of all the hedgies watched by Insider Monkey, valued at close to $49.2 million in stock. Richard Schimel and Lawrence Sapanski’s fund, Cinctive Capital Management, also said goodbye to its stock, about $8.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q1.
Let’s also examine hedge fund activity in other stocks similar to Republic Services, Inc. (NYSE:RSG). These stocks are QuantumScape Corporation (NYSE:QS), Zillow Group Inc (NASDAQ:Z), LyondellBasell Industries NV (NYSE:LYB), Phillips 66 (NYSE:PSX), XPeng Inc. (NYSE:XPEV), Ball Corporation (NYSE:BLL), and Schlumberger Limited. (NYSE:SLB). This group of stocks’ market caps are similar to RSG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QS | 35 | 1848564 | 35 |
| Z | 83 | 5812175 | 14 |
| LYB | 27 | 682905 | -4 |
| PSX | 26 | 191517 | -1 |
| XPEV | 30 | 820952 | 4 |
| BLL | 44 | 944165 | 11 |
| SLB | 50 | 1226025 | -3 |
| Average | 42.1 | 1646615 | 8 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.1 hedge funds with bullish positions and the average amount invested in these stocks was $1647 million. That figure was $1099 million in RSG’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Phillips 66 (NYSE:PSX) is the least popular one with only 26 bullish hedge fund positions. Republic Services, Inc. (NYSE:RSG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RSG is 42. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately RSG wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); RSG investors were disappointed as the stock returned 4% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Republic Services Inc. (NYSE:RSG)
Follow Republic Services Inc. (NYSE:RSG)
Disclosure: None. This article was originally published at Insider Monkey.
