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Did Hedge Funds Drop The Ball ON CRH PLC (CRH) ?

Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

CRH PLC (NYSE:CRH) shareholders have witnessed an increase in hedge fund interest of late. CRH was in 7 hedge funds’ portfolios at the end of June. There were 5 hedge funds in our database with CRH holdings at the end of the previous quarter. Our calculations also showed that CRH isn’t among the 30 most popular stocks among hedge funds.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

CRH_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the fresh hedge fund action regarding CRH PLC (NYSE:CRH).

How are hedge funds trading CRH PLC (NYSE:CRH)?

At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CRH over the last 16 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Paul Marshall Marshall Wace

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the biggest position in CRH PLC (NYSE:CRH). Renaissance Technologies has a $51.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is GMT Capital, managed by Thomas E. Claugus, which holds a $16.1 million position; 0.6% of its 13F portfolio is allocated to the stock. Other peers that hold long positions encompass Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Michael Gelband’s ExodusPoint Capital.

Now, some big names were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the largest position in CRH PLC (NYSE:CRH). Two Sigma Advisors had $1 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.9 million position during the quarter. The following funds were also among the new CRH investors: Paul Marshall and Ian Wace’s Marshall Wace LLP and Matthew Tewksbury’s Stevens Capital Management.

Let’s also examine hedge fund activity in other stocks similar to CRH PLC (NYSE:CRH). These stocks are WEC Energy Group, Inc. (NYSE:WEC), Spotify Technology S.A. (NYSE:SPOT), Corning Incorporated (NYSE:GLW), and Wipro Limited (NYSE:WIT). This group of stocks’ market caps are closest to CRH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WEC 13 392685 -2
SPOT 42 1748170 -11
GLW 26 279452 -11
WIT 14 145135 3
Average 23.75 641361 -5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $641 million. That figure was $79 million in CRH’s case. Spotify Technology S.A. (NYSE:SPOT) is the most popular stock in this table. On the other hand WEC Energy Group, Inc. (NYSE:WEC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks CRH PLC (NYSE:CRH) is even less popular than WEC. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on CRH, though not to the same extent, as the stock returned 5.6% during the third quarter and outperformed the market as well.

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

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