Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Clean Harbors Inc (NYSE:CLH).
Hedge fund interest in Clean Harbors Inc (NYSE:CLH) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CLH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Fate Therapeutics Inc (NASDAQ:FATE), Valvoline Inc. (NYSE:VVV), and Harley-Davidson, Inc. (NYSE:HOG) to gather more data points.
Andrew Sandler of Sandler Capital Management
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 look at the new hedge fund action surrounding Clean Harbors Inc (NYSE:CLH).
Do Hedge Funds Think CLH Is A Good Stock To Buy Now?
At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CLH over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Clean Harbors Inc (NYSE:CLH), which was worth $151.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $43.9 million worth of shares. Sandler Capital Management, Millennium Management, and 12th Street Asset Management 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 12th Street Asset Management allocated the biggest weight to Clean Harbors Inc (NYSE:CLH), around 7.3% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, dishing out 3.1 percent of its 13F equity portfolio to CLH.
Because Clean Harbors Inc (NYSE:CLH) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers that decided to sell off their entire stakes in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest investment of the 750 funds watched by Insider Monkey, comprising an estimated $13.4 million in stock. Robert Charles Gibbins’s fund, Autonomy Capital, also said goodbye to its stock, about $2.2 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Clean Harbors Inc (NYSE:CLH) but similarly valued. We will take a look at Fate Therapeutics Inc (NASDAQ:FATE), Valvoline Inc. (NYSE:VVV), Harley-Davidson, Inc. (NYSE:HOG), Southwestern Energy Company (NYSE:SWN), Colliers International Group Inc (NASDAQ:CIGI), Maravai LifeSciences Holdings, Inc. (NASDAQ:MRVI), and Grupo Aeroportuario del Sureste (NYSE:ASR). This group of stocks’ market values are similar to CLH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FATE | 36 | 2103428 | -4 |
| VVV | 23 | 641833 | -3 |
| HOG | 33 | 956467 | -4 |
| SWN | 22 | 263603 | -5 |
| CIGI | 16 | 726941 | -1 |
| MRVI | 34 | 1068071 | 14 |
| ASR | 2 | 23593 | -3 |
| Average | 23.7 | 826277 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $826 million. That figure was $391 million in CLH’s case. Fate Therapeutics Inc (NASDAQ:FATE) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (NYSE:ASR) is the least popular one with only 2 bullish hedge fund positions. Clean Harbors Inc (NYSE:CLH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLH is 63.1. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately CLH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CLH were disappointed as the stock returned -3.7% since the end of September (through 12/9) 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.
Follow Clean Harbors Inc (NYSE:CLH)
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Disclosure: None. This article was originally published at Insider Monkey.
