We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Charles River Laboratories International Inc. (NYSE:CRL) and determine whether hedge funds skillfully traded this stock.
Charles River Laboratories International Inc. (NYSE:CRL) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CRL investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 44 hedge funds in our database with CRL holdings at the end of June. Our calculations also showed that CRL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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 let’s go over the fresh hedge fund action surrounding Charles River Laboratories International Inc. (NYSE:CRL).
Paul Marshall of Marshall Wace
Do Hedge Funds Think CRL Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 36 hedge funds with a bullish position in CRL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Melvin Capital Management, managed by Gabriel Plotkin, holds the most valuable position in Charles River Laboratories International Inc. (NYSE:CRL). Melvin Capital Management has a $154.8 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $124.8 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism include Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management and Murray Stahl’s Horizon Asset Management. In terms of the portfolio weights assigned to each position Tower House Partners allocated the biggest weight to Charles River Laboratories International Inc. (NYSE:CRL), around 20.66% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, dishing out 4.38 percent of its 13F equity portfolio to CRL.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Melvin Capital Management, managed by Gabriel Plotkin, assembled the biggest position in Charles River Laboratories International Inc. (NYSE:CRL). Melvin Capital Management had $154.8 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also initiated a $74.8 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Jinghua Yan’s TwinBeech Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Charles River Laboratories International Inc. (NYSE:CRL). These stocks are Essex Property Trust Inc (NYSE:ESS), MGM Resorts International (NYSE:MGM), Trimble Inc. (NASDAQ:TRMB), KeyCorp (NYSE:KEY), Fresenius Medical Care AG & Co. KGaA (NYSE:FMS), Baker Hughes Company (NASDAQ:BKR), and W.W. Grainger, Inc. (NYSE:GWW). This group of stocks’ market values match CRL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESS | 21 | 264061 | 0 |
| MGM | 50 | 2740827 | -9 |
| TRMB | 34 | 1814792 | 7 |
| KEY | 36 | 399496 | -4 |
| FMS | 4 | 231694 | -1 |
| BKR | 37 | 1013933 | -3 |
| GWW | 28 | 306060 | -1 |
| Average | 30 | 967266 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $967 million. That figure was $1295 million in CRL’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 4 bullish hedge fund positions. Charles River Laboratories International Inc. (NYSE:CRL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CRL is 82.7. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, CRL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CRL were disappointed as the stock returned -20.1% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Charles River Laboratories International Inc. (NYSE:CRL)
Follow Charles River Laboratories International Inc. (NYSE:CRL)
Suggested Articles:
- Top 20 Gold Mining Companies In The World
- 25 Largest Lakes In The US
- 30 Most Dangerous Cities in the U.S.
Disclosure: None. This article was originally published at Insider Monkey.
