Is Cintas Corporation (CTAS) Worth Your Attention?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 mid-cap stocks among the best performing hedge funds in our database yielded an average return of 18% during the last 12 months, outperforming the S&P 500 Index funds by double digits. Although the elite funds occasionally have their duds, such as SunEdison and Valeant, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cintas Corporation (NASDAQ:CTAS).

It looks like hedge funds are in a bullish mood when it comes to Cintas Corporation. During the third quarter, the number of investors betting on the stock went up by six, as 33 funds tracked by Insider Monkey reported long positions in the company as of the end of September. However, 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 Hasbro, Inc. (NASDAQ:HAS), Harris Corporation (NYSE:HRS), and Fiat Chrysler Automobiles NV (NYSE:FCAU) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Keeping this in mind, we’re going to check out the key action encompassing Cintas Corporation (NASDAQ:CTAS).

How are hedge funds trading Cintas Corporation (NASDAQ:CTAS)?

Heading into the fourth quarter of 2016, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 22% over the quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’ AQR Capital Management holds the biggest position in Cintas Corporation (NASDAQ:CTAS). AQR Capital Management has a $145.1 million position in the stock, comprising 0.2% of its 13F portfolio. The second most bullish fund manager is Alkeon Capital Management, led by Panayotis Takis Sparaggis, which holds a $91 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners and Jim Simons’ Renaissance Technologies.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Cintas Corporation (NASDAQ:CTAS). Marshall Wace LLP had $57.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $34.5 million position during the quarter. The following funds were also among the new CTAS investors: Alexander Mitchell’s Scopus Asset Management, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Matthew Tewksbury’s Stevens Capital Management.

Let’s now review 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 Hasbro, Inc. (NASDAQ:HAS), Harris Corporation (NYSE:HRS), Fiat Chrysler Automobiles NV (NYSE:FCAU), and Macy’s, Inc. (NYSE:M). This group of stocks’ market caps are closest to CTAS’s market cap.

As you can see these stocks had an average of 35 funds holding shares and the average amount invested in these stocks was $711 million. That figure was $588 million in CTAS’s case. Macy’s, Inc. (NYSE:M) is the most popular stock in this table. On the other hand Hasbro, Inc. (NASDAQ:HAS) is the least popular one with only 22 bullish hedge fund positions. Cintas Corporation (NASDAQ:CTAS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Macy’s, Inc. (NYSE:M) might be a better candidate to consider a long position.