Where Do Hedge Funds Stand On ChampionX Corporation (CHX)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded ChampionX Corporation (NASDAQ:CHX) based on those filings.

ChampionX Corporation (NASDAQ:CHX) shareholders have witnessed a decrease in hedge fund interest in recent months. ChampionX Corporation (NASDAQ:CHX) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. There were 30 hedge funds in our database with CHX holdings at the end of June. Our calculations also showed that CHX 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 go over the fresh hedge fund action encompassing ChampionX Corporation (NASDAQ:CHX).

Jeffrey Gates of Gates Capital

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

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHX over the last 25 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, Paradice Investment Management was the largest shareholder of ChampionX Corporation (NASDAQ:CHX), with a stake worth $105.5 million reported as of the end of September. Trailing Paradice Investment Management was Gates Capital Management, which amassed a stake valued at $104.6 million. D E Shaw, Iridian Asset Management, and Holocene Advisors 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 Paradice Investment Management allocated the biggest weight to ChampionX Corporation (NASDAQ:CHX), around 4.77% of its 13F portfolio. Gates Capital Management is also relatively very bullish on the stock, earmarking 2.88 percent of its 13F equity portfolio to CHX.

Since ChampionX Corporation (NASDAQ:CHX) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few fund managers who were dropping their positions entirely last quarter. Intriguingly, Steven Richman’s East Side Capital (RR Partners) dumped the biggest position of the 750 funds watched by Insider Monkey, totaling close to $46.8 million in stock, and Todd J. Kantor’s Encompass Capital Advisors was right behind this move, as the fund cut about $7.7 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ChampionX Corporation (NASDAQ:CHX) but similarly valued. These stocks are Virtu Financial Inc (NASDAQ:VIRT), Revolve Group, Inc. (NYSE:RVLV), Air Lease Corp (NYSE:AL), Madison Square Garden Sports Corp. (NYSE:MSGS), DT Midstream Inc. (NYSE:DTM), John Bean Technologies Corporation (NYSE:JBT), and Hawaiian Electric Industries, Inc. (NYSE:HE). All of these stocks’ market caps match CHX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $398 million. That figure was $445 million in CHX’s case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand John Bean Technologies Corporation (NYSE:JBT) is the least popular one with only 13 bullish hedge fund positions. ChampionX Corporation (NASDAQ:CHX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHX is 69.4. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CHX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CHX were disappointed as the stock returned -8.7% since the end of September (through 11/30) 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.

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