We can judge whether Republic Services, Inc. (NYSE:RSG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.
Republic Services shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 30 hedge funds’ portfolios at the end of September. At the end of this article we will also compare RSG to other stocks, including Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (NYSE:KOF), Hess Corp. (NYSE:HES), and Mead Johnson Nutrition CO (NYSE:MJN) to get a better sense of its popularity.
Follow Republic Services Inc. (NYSE:RSG)
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To the average investor there are a large number of metrics investors employ to evaluate their holdings. Two of the best metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a healthy margin (see the details here).
With all of this in mind, let’s go over the latest action regarding Republic Services, Inc. (NYSE:RSG).
How have hedgies been trading Republic Services, Inc. (NYSE:RSG)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Republic Services, Inc. (NYSE:RSG). GAMCO Investors has a $124 million position in the stock, comprising 0.8% of its 13F portfolio. On GAMCO Investors’s heels is Cliff Asness’ AQR Capital Management, with a $52.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Anand Parekh’s Alyeska Investment Group, Jim Simons’ Renaissance Technologies and Israel Englander’s Millennium Management.
Since Republic Services, Inc. (NYSE:RSG) has faced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of money managers that decided to sell off their positions entirely heading into Q4. Interestingly, Daniel S. Och’s OZ Management cut the largest investment of all the hedgies followed by Insider Monkey, worth close to $45.1 million in stock. Malcolm Fairbairn’s fund, Ascend Capital, also said goodbye to its stock, about $32.5 million worth. These transactions are intriguing to say the least, 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 similar to Republic Services, Inc. (NYSE:RSG). We will take a look at Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (NYSE:KOF), Hess Corp. (NYSE:HES), Mead Johnson Nutrition CO (NYSE:MJN), and Tenaris S.A. (ADR) (NYSE:TS). This group of stocks’ market valuations are similar to RSG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KOF | 11 | 492649 | 3 |
| HES | 41 | 1580894 | -2 |
| MJN | 43 | 1632869 | -1 |
| TS | 13 | 104036 | 2 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $953 million. That figure was $374 million in RSG’s case. Mead Johnson Nutrition CO (NYSE:MJN) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (NYSE:KOF) is the least popular one with only 11 bullish hedge fund positions. Republic Services, Inc. (NYSE:RSG) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MJN might be a better candidate to consider a long position.
