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Carlisle Companies, Inc. (CSL) vs. Hedge Fund Favorites in 2019

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards Carlisle Companies, Inc. (NYSE:CSL).

Is Carlisle Companies, Inc. (NYSE:CSL) a marvelous investment today? The best stock pickers are in a bullish mood. The number of bullish hedge fund positions advanced by 5 in recent months. Our calculations also showed that CSL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings). CSL was in 30 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with CSL positions at the end of the previous quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now we’re going to review the recent hedge fund action regarding Carlisle Companies, Inc. (NYSE:CSL).

Hedge fund activity in Carlisle Companies, Inc. (NYSE:CSL)

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, a change of 20% from the second quarter of 2019. On the other hand, there were a total of 22 hedge funds with a bullish position in CSL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in Carlisle Companies, Inc. (NYSE:CSL) was held by Alyeska Investment Group, which reported holding $47.5 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $46.4 million position. Other investors bullish on the company included Balyasny Asset Management, Millennium Management, and Pzena Investment Management. In terms of the portfolio weights assigned to each position Lodge Hill Capital allocated the biggest weight to Carlisle Companies, Inc. (NYSE:CSL), around 11.54% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, setting aside 2.78 percent of its 13F equity portfolio to CSL.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, initiated the most outsized position in Carlisle Companies, Inc. (NYSE:CSL). Alyeska Investment Group had $47.5 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $5 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace, Paul Tudor Jones’s Tudor Investment Corp, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s check out hedge fund activity in other stocks similar to Carlisle Companies, Inc. (NYSE:CSL). These stocks are Lamar Advertising Company (REIT) (NASDAQ:LAMR), Tradeweb Markets Inc. (NASDAQ:TW), Gaming and Leisure Properties Inc (NASDAQ:GLPI), and National Oilwell Varco, Inc. (NYSE:NOV). This group of stocks’ market caps are closest to CSL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LAMR 28 238134 4
TW 37 400592 0
GLPI 31 773259 4
NOV 23 894471 1
Average 29.75 576614 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $577 million. That figure was $455 million in CSL’s case. Tradeweb Markets Inc. (NASDAQ:TW) is the most popular stock in this table. On the other hand National Oilwell Varco, Inc. (NYSE:NOV) is the least popular one with only 23 bullish hedge fund positions. Carlisle Companies, Inc. (NYSE:CSL) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on CSL as the stock returned 62.9% in 2019 (through December 23rd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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