The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Cintas Corporation (NASDAQ:CTAS) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Cintas Corporation (NASDAQ:CTAS) has seen an increase in hedge fund sentiment in recent months. Cintas Corporation (NASDAQ:CTAS) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. Our calculations also showed that CTAS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard Chilton of Chilton Investment Company
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a gander at the fresh hedge fund action surrounding Cintas Corporation (NASDAQ:CTAS).
Do Hedge Funds Think CTAS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 71% from the previous quarter. By comparison, 38 hedge funds held shares or bullish call options in CTAS a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Alkeon Capital Management held the most valuable stake in Cintas Corporation (NASDAQ:CTAS), which was worth $153.3 million at the end of the third quarter. On the second spot was Chilton Investment Company which amassed $134.8 million worth of shares. Bristol Gate Capital Partners, Impax Asset Management, 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 Lunia Capital allocated the biggest weight to Cintas Corporation (NASDAQ:CTAS), around 5.9% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, earmarking 4.69 percent of its 13F equity portfolio to CTAS.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Impax Asset Management, managed by Ian Simm, established the most outsized position in Cintas Corporation (NASDAQ:CTAS). Impax Asset Management had $88.5 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $65 million position during the quarter. The following funds were also among the new CTAS investors: Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors, and D. E. Shaw’s D E Shaw.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cintas Corporation (NASDAQ:CTAS) but similarly valued. We will take a look at Marathon Petroleum Corp (NYSE:MPC), Alcon Inc. (NYSE:ALC), Motorola Solutions Inc (NYSE:MSI), Cognizant Technology Solutions Corp (NASDAQ:CTSH), Ross Stores, Inc. (NASDAQ:ROST), ResMed Inc. (NYSE:RMD), and Republic Services, Inc. (NYSE:RSG). This group of stocks’ market values are similar to CTAS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MPC | 43 | 2688865 | -5 |
| ALC | 20 | 1263277 | -2 |
| MSI | 34 | 1266185 | -3 |
| CTSH | 29 | 2336693 | -12 |
| ROST | 41 | 1220437 | -10 |
| RMD | 28 | 396289 | 2 |
| RSG | 31 | 1222055 | -3 |
| Average | 32.3 | 1484829 | -4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1485 million. That figure was $782 million in CTAS’s case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Alcon Inc. (NYSE:ALC) is the least popular one with only 20 bullish hedge fund positions. Cintas Corporation (NASDAQ:CTAS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CTAS is 68.8. 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 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on CTAS as the stock returned 3.1% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
