Did Hedge Funds Make The Right Call On Chart Industries, Inc. (GTLS) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtChart Industries, Inc. (NASDAQ:GTLS) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Chart Industries, Inc. (NASDAQ:GTLS) a bargain? Hedge funds were becoming more confident. The number of long hedge fund bets improved by 2 in recent months. Our calculations also showed that GTLS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing Chart Industries, Inc. (NASDAQ:GTLS).

Hedge fund activity in Chart Industries, Inc. (NASDAQ:GTLS)

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GTLS over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GTLS A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the number one position in Chart Industries, Inc. (NASDAQ:GTLS). Fisher Asset Management has a $23.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $21.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions include Todd J. Kantor’s Encompass Capital Advisors, Israel Englander’s Millennium Management and Matt Smith’s Deep Basin Capital. In terms of the portfolio weights assigned to each position Deep Basin Capital allocated the biggest weight to Chart Industries, Inc. (NASDAQ:GTLS), around 2.91% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, setting aside 2.11 percent of its 13F equity portfolio to GTLS.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Encompass Capital Advisors, managed by Todd J. Kantor, established the most valuable position in Chart Industries, Inc. (NASDAQ:GTLS). Encompass Capital Advisors had $19.7 million invested in the company at the end of the quarter. Matt Smith’s Deep Basin Capital also made a $11.5 million investment in the stock during the quarter. The other funds with brand new GTLS positions are Warren Lammert’s Granite Point Capital, Noam Gottesman’s GLG Partners, and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chart Industries, Inc. (NASDAQ:GTLS) but similarly valued. We will take a look at Huron Consulting Group (NASDAQ:HURN), Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), Fangdd Network Group Ltd. (NASDAQ:DUO), and Middlesex Water Company (NASDAQ:MSEX). This group of stocks’ market caps are similar to GTLS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HURN 17 57403 3
YMAB 11 98663 -1
DUO 1 413 0
MSEX 7 49591 -2
Average 9 51518 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $120 million in GTLS’s case. Huron Consulting Group (NASDAQ:HURN) is the most popular stock in this table. On the other hand Fangdd Network Group Ltd. (NASDAQ:DUO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Chart Industries, Inc. (NASDAQ:GTLS) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 18.6% in 2020 through July 27th but still managed to beat the market by 17.1 percentage points. Hedge funds were also right about betting on GTLS as the stock returned 133.5% since Q1 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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