The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards CSX Corporation (NASDAQ:CSX).
CSX Corporation (NASDAQ:CSX) shareholders have witnessed an increase in hedge fund interest lately. CSX Corporation (NASDAQ:CSX) was in 56 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 63. Our calculations also showed that CSX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Armitage of Egerton Capital
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. Now let’s take a glance at the new hedge fund action regarding CSX Corporation (NASDAQ:CSX).
Do Hedge Funds Think CSX Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 46 hedge funds with a bullish position in CSX a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Soroban Capital Partners held the most valuable stake in CSX Corporation (NASDAQ:CSX), which was worth $1034.1 million at the end of the second quarter. On the second spot was Egerton Capital Limited which amassed $1024.9 million worth of shares. Fisher Asset Management, Two Sigma Advisors, and Renaissance Technologies 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 Soroban Capital Partners allocated the biggest weight to CSX Corporation (NASDAQ:CSX), around 8.73% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, earmarking 6.09 percent of its 13F equity portfolio to CSX.
With a general bullishness amongst the heavyweights, some big names have jumped into CSX Corporation (NASDAQ:CSX) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in CSX Corporation (NASDAQ:CSX). Balyasny Asset Management had $28.5 million invested in the company at the end of the quarter. Jos Shaver’s Electron Capital Partners also initiated a $26.9 million position during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Michael Cowley’s Sandbar Asset Management, and Dipak Patel’s Alight Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CSX Corporation (NASDAQ:CSX) but similarly valued. We will take a look at The Sherwin-Williams Company (NYSE:SHW), Coupang, Inc. (NYSE:CPNG), Equinix, Inc. (REIT) (NASDAQ:EQIX), Snowflake Inc (NYSE:SNOW), Marsh & McLennan Companies, Inc. (NYSE:MMC), Chubb Limited (NYSE:CB), and Baidu, Inc. (NASDAQ:BIDU). This group of stocks’ market values are closest to CSX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHW | 49 | 2028984 | -2 |
| CPNG | 33 | 18042813 | -7 |
| EQIX | 33 | 1266516 | -8 |
| SNOW | 70 | 12507692 | -1 |
| MMC | 41 | 2537494 | 4 |
| CB | 42 | 1737776 | 1 |
| BIDU | 59 | 3474215 | -30 |
| Average | 46.7 | 5942213 | -6.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.7 hedge funds with bullish positions and the average amount invested in these stocks was $5942 million. That figure was $4224 million in CSX’s case. Snowflake Inc (NYSE:SNOW) is the most popular stock in this table. On the other hand Coupang, Inc. (NYSE:CPNG) is the least popular one with only 33 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 65.7. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately CSX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CSX were disappointed as the stock returned -4.5% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Csx Corp (NYSE:CSX)
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Disclosure: None. This article was originally published at Insider Monkey.
