Americold Realty Trust (COLD): Are Hedge Funds Right About This Stock?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Americold Realty Trust (NYSE:COLD).

Americold Realty Trust (NYSE:COLD) investors should be aware of an increase in activity from the world’s largest hedge funds lately. COLD was in 21 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with COLD positions at the end of the previous quarter. Our calculations also showed that cold isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny

Let’s review the new hedge fund action regarding Americold Realty Trust (NYSE:COLD).

How are hedge funds trading Americold Realty Trust (NYSE:COLD)?

Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 110% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards COLD over the last 13 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

No of Hedge Funds with COLD Positions

Among these funds, Senator Investment Group held the most valuable stake in Americold Realty Trust (NYSE:COLD), which was worth $200.2 million at the end of the third quarter. On the second spot was Zimmer Partners which amassed $62.6 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and Balyasny Asset Management were also bullish on Americold Realty Trust (NYSE:COLD), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, initiated the most outsized position in Americold Realty Trust (NYSE:COLD). Zimmer Partners had $62.6 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $33.9 million position during the quarter. The following funds were also among the new COLD investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Clint Carlson’s Carlson Capital, and Jeffrey Furber’s AEW Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Americold Realty Trust (NYSE:COLD) but similarly valued. These stocks are Black Stone Minerals LP (NYSE:BSM), Ensco plc (NYSE:ESV), Manchester United PLC (NYSE:MANU), and Delek US Holdings, Inc. (NYSE:DK). All of these stocks’ market caps match COLD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BSM 5 19218 -2
ESV 29 677112 2
MANU 8 95726 0
DK 31 403699 2
Average 18.25 298939 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $299 million. That figure was $542 million in COLD’s case. Delek US Holdings, Inc. (NYSE:DK) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 5 bullish hedge fund positions. Americold Realty Trust (NYSE:COLD) 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 DK might be a better candidate to consider a long position.

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