We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Chart Industries, Inc. (NASDAQ:GTLS) based on those filings.
Chart Industries, Inc. (NASDAQ:GTLS) investors should pay attention to a decrease in enthusiasm from smart money of late. GTLS was in 19 hedge funds’ portfolios at the end of December. There were 23 hedge funds in our database with GTLS holdings at the end of the previous quarter. Our calculations also showed that GTLS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most shareholders, hedge funds are viewed as unimportant, old investment tools of the past. While there are more than 8000 funds trading at present, Our experts look at the elite of this club, around 850 funds. It is estimated that this group of investors administer the majority of the hedge fund industry’s total capital, and by shadowing their unrivaled picks, Insider Monkey has unsheathed numerous investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Ken Fisher of Fisher Asset Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the latest hedge fund action surrounding Chart Industries, Inc. (NASDAQ:GTLS).
How have hedgies been trading Chart Industries, Inc. (NASDAQ:GTLS)?
At Q4’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the third quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in GTLS 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.
The largest stake in Chart Industries, Inc. (NASDAQ:GTLS) was held by Fisher Asset Management, which reported holding $59.2 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $49.2 million position. Other investors bullish on the company included Schonfeld Strategic Advisors, Alyeska Investment Group, and SIR Capital Management. In terms of the portfolio weights assigned to each position SIR Capital Management allocated the biggest weight to Chart Industries, Inc. (NASDAQ:GTLS), around 5.05% of its 13F portfolio. Yaupon Capital is also relatively very bullish on the stock, setting aside 3.73 percent of its 13F equity portfolio to GTLS.
Because Chart Industries, Inc. (NASDAQ:GTLS) has faced falling interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers that elected to cut their positions entirely last quarter. It’s worth mentioning that Till Bechtolsheimer’s Arosa Capital Management cut the biggest position of the 750 funds monitored by Insider Monkey, comprising an estimated $7.6 million in stock, and William Harnisch’s Peconic Partners LLC was right behind this move, as the fund dumped about $1.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Chart Industries, Inc. (NASDAQ:GTLS) but similarly valued. These stocks are Newmark Group, Inc. (NASDAQ:NMRK), SVMK Inc. (NASDAQ:SVMK), ArQule, Inc. (NASDAQ:ARQL), and ESCO Technologies Inc. (NYSE:ESE). This group of stocks’ market caps are similar to GTLS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NMRK | 23 | 157189 | 1 |
| SVMK | 31 | 302485 | 5 |
| ARQL | 46 | 966954 | 22 |
| ESE | 9 | 42972 | 1 |
| Average | 27.25 | 367400 | 7.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $269 million in GTLS’s case. ArQule, Inc. (NASDAQ:ARQL) is the most popular stock in this table. On the other hand ESCO Technologies Inc. (NYSE:ESE) is the least popular one with only 9 bullish hedge fund positions. Chart Industries, Inc. (NASDAQ:GTLS) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately GTLS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GTLS investors were disappointed as the stock returned -62.9% 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 most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
