Five Environmental Solutions Stocks Hedge Funds Are Bullish on

While the boundaries of the environment industry are unknown and not easily defined, Insider Monkey decided to compile a list of five environmental solutions stocks hedge funds tracked by our team favor. The environment industry supplies pollution control, reduction, cleanup and waste handling equipment and related services, as well as a fast-growing range of other environmental services. The U.S. environmental market is anticipated to grow at a rate twice the growth rate of the U.S. economy. This impressive growth will most likely be spurred by continuous construction activity, in addition to state and local infrastructure spending. Without further ado, let’s have a look at the five environmental solutions stocks most loved by the hedge fund vehicles tracked by Insider Monkey.

At Insider Monkey, we track around 770 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

#5. Clean Harbors Inc. (NYSE:CLH)

– Investors with long positions as of March 31: 13

– Aggregate value of investors’ holdings as of March 31: $191.00 Million

Clean Harbors Inc. (NYSE:CLH) fell out of favor with the hedge funds monitored by Insider Monkey during the first quarter of 2016, as the number of funds with stakes in the company fell to 13 from 18 quarter-over-quarter. In spite of this decline, the overall value of those stakes rose to $191.00 million from $182.40 million. The 13 funds invested in Clean Harbors amassed nearly 7% of the company’s outstanding common stock. The provider of environmental, energy and industrial services has seen its market value jump by 26% since the beginning of 2016. The company provides a wide array of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. As a result, Clean Harbors’ revenues for the first three months of the year dropped 13.2% year-over-year to $636.1 million, partially due to continued weakness in crude oil markets and decreases in commodity pricing. Ian Simm’s Impax Asset Management upped its stake in Clean Harbors Inc. (NYSE:CLH) by 40% during the March quarter to 593,370 shares.

#4. Stericycle Inc. (NASDAQ:SRCL)

– Investors with long positions as of March 31: 18

– Aggregate value of investors’ holdings as of March 31: $518.73 Million

Stericycle Inc. (NASDAQ:SRCL) has also lost some appeal among the hedge funds followed by our team, after the number asset managers from our system with long positions in the company declined to 18 from 20 during the March quarter. Nonetheless, the aggregate value of those positions increased by 92% quarter-over-quarter to $518.73 million, partially due to a nearly 5% increase in the share price of the company’s stock, so the hedge funds monitored by us were bullish on Stericycle after all. The business-to-business services provider has seen its shares plummet by 18% since the start of the year, mainly owing to a weaker-than-expected earnings report. Precisely, Stericycle’s weak industrial hazardous waste revenue and a slower-than-expected integration of the Shred-it acquisition highlighted the company’s first-quarter earnings report. Subsequently, the medical waste disposal specialist lowered its full-year revenue guidance to the range of $3.60 billion-to-$3.66 billion from the range of $3.65 billion-to-$3.74 billion. Barry Rosenstein’s JANA Partners acquired a new stake of 2.42 million shares of Stericycle Inc. (NASDAQ:SRCL) during the first quarter.

#3. Waste Connections Inc. (NYSE:WCN)

– Investors with long positions as of March 31: 26

– Aggregate value of investors’ holdings as of March 31: $518.95 Million

The hedge fund sentiment towards Waste Connections Inc. (NYSE:WCN) increased during first three months of 2016, as the number of funds from our database invested in the company climbed to 26 from 24 quarter-over-quarter. Nevertheless, the overall value of those funds’ equity investments in Waster Connections shrunk to $518.95 million from $880.58 million, despite the stock having enjoyed a 15% gain in the first quarter. All in all, it appears that some hedge fund vehicles invested in Waste Connections reduced their exposure to the company during the quarter. Earlier this month, Texas-based Waste Connections and Toronto-based Progressive Waste Solutions Ltd completed their all-stock merger that placed the combined company’s corporate address in Canada. The transaction was structured as a reverse merger, with Waster Connections shareholders owning roughly 70% of the combined company and Progressive Waste shareholders having a 30% stake. Clifton S. Robbins’ Blue Harbour Group owned 3.98 million shares of Waste Connections Inc. (NYSE:WCN) at the end of March.

#2. Republic Services Inc. (NYSE:RSG)

– Investors with long positions as of March 31: 28

– Aggregate value of investors’ holdings as of March 31: $527.91 Million

Republic Services Inc. (NYSE:RSG) received some love from the asset managers monitored by our team in the January-to-March period, during which the number of managers with stakes in the company spiked to 28 from 21 quarter-over-quarter. Correspondingly, the aggregate value of all those stakes rose to $527.91 million from $429.95 million. The shares of the second-largest provider of services in the U.S. non-hazardous solid waste industry are trading near their 52-week high of $48.96 and are almost 11% in the green year-to-date. The company’s revenues, which are primarily derived from its solid waste collection operations, for the first three months of 2016 increased by 3.6% year-over-year to $2.25 billion. Shares of Republic Services are currently changing hands at around 20.8-times expected earnings, versus the forward PE multiple of 16.8 for the S&P 500 Index. Cliff Asness’ AQR Capital Management reported ownership of 2.62 million shares of Republic Services Inc. (NYSE:RSG) through the latest round of 13Fs.

#1. Waste Management Inc. (NYSE:WM)

– Investors with long positions as of March 31: 28

– Aggregate value of investors’ holdings as of March 31: $1.57 Billion

There were 28 hedge funds followed by Insider Monkey with equity investments in Waste Management Inc. (NYSE:WM) at the end of the March quarter, as compared to 29 registered at the end of the prior quarter. Meanwhile, the dollar value of those equity investments grew to $1.57 billion from $1.42 billion quarter-over-quarter, thanks to an 11% price appreciation of WM shares. The 28 asset managers invested in WM accumulated 6% of the company’s total number of outstanding shares. The North American provider of comprehensive waste management environment services has seen its market cap gain 15% thus far in 2016. Waste Management’s revenues for the first quarter of 2016 were $3.18 billion, up from $3.04 billion recorded a year ago. The increase was mainly driven by several acquisitions, particularly the acquisition of Deffenbaugh Disposal, a privately-owned collection and disposal firm in the Midwest, and the acquisition of certain operations and assets of Southern Waste Systems/Sun Recycling (SWS) in Southern Florida. The Bill & Melinda Gates Foundation Trust, overseen by Michael Larson, owns 18.63 million shares of Waste Management Inc. (NYSE:WM) as of the end of the first quarter.

Disclosure: None