Were Hedge Funds Right About Republic Services, Inc. (RSG)?

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 Republic Services, Inc. (NYSE:RSG) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Republic Services, Inc. (NYSE:RSG) has experienced a decrease in hedge fund interest lately. Republic Services, Inc. (NYSE:RSG) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. There were 34 hedge funds in our database with RSG holdings at the end of June. Our calculations also showed that RSG 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. Keeping this in mind we’re going to take a peek at the key hedge fund action encompassing Republic Services, Inc. (NYSE:RSG).

Richard Chilton of Chilton Investment Company

Do Hedge Funds Think RSG Is A Good Stock To Buy Now?

At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards RSG over the last 25 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in Republic Services, Inc. (NYSE:RSG) was held by AQR Capital Management, which reported holding $200.1 million worth of stock at the end of September. It was followed by Chilton Investment Company with a $156.5 million position. Other investors bullish on the company included Millennium Management, Adage Capital Management, and GAMCO Investors. In terms of the portfolio weights assigned to each position Chilton Investment Company allocated the biggest weight to Republic Services, Inc. (NYSE:RSG), around 3.86% of its 13F portfolio. Covalis Capital is also relatively very bullish on the stock, earmarking 2.85 percent of its 13F equity portfolio to RSG.

Seeing as Republic Services, Inc. (NYSE:RSG) has witnessed falling interest from hedge fund managers, it’s easy to see that there exists a select few hedgies that elected to cut their positions entirely heading into Q4. Intriguingly, Louis Bacon’s Moore Global Investments sold off the biggest stake of the 750 funds followed by Insider Monkey, comprising about $11.1 million in stock. Andrew Byington’s fund, Appian Way Asset Management, also dropped its stock, about $8.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Republic Services, Inc. (NYSE:RSG) but similarly valued. We will take a look at SVB Financial Group (NASDAQ:SIVB), The Travelers Companies Inc (NYSE:TRV), Kinder Morgan Inc (NYSE:KMI), The Allstate Corporation (NYSE:ALL), DiDi Global Inc. (NYSE:DIDI), Manulife Financial Corporation (NYSE:MFC), and Xilinx, Inc. (NASDAQ:XLNX). This group of stocks’ market values match RSG’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $1295 million. That figure was $1222 million in RSG’s case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand DiDi Global Inc. (NYSE:DIDI) is the least popular one with only 15 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 44.2. 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 beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on RSG as the stock returned 6.7% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.