Hedge Funds Are Betting On Carrier Global Corporation (CARR)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Carrier Global Corporation (NYSE:CARR) based on that data and determine whether they were really smart about the stock.

Carrier Global Corporation (NYSE:CARR) was in 44 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CARR investors should be aware of an increase in activity from the world’s largest hedge funds lately. There were 3 hedge funds in our database with CARR holdings at the end of March. Our calculations also showed that CARR isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the financial world there are tons of gauges shareholders can use to appraise stocks. A couple of the less known gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top investment managers can outpace their index-focused peers by a very impressive amount (see the details here).

Mason Hawkins of Southeastern Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Keeping this in mind let’s take a look at the key hedge fund action encompassing Carrier Global Corporation (NYSE:CARR).

How are hedge funds trading Carrier Global Corporation (NYSE:CARR)?

At the end of June, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 1367% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CARR over the last 20 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 CARR A Good Stock To Buy?

The largest stake in Carrier Global Corporation (NYSE:CARR) was held by Southpoint Capital Advisors, which reported holding $266.6 million worth of stock at the end of September. It was followed by Southeastern Asset Management with a $197.2 million position. Other investors bullish on the company included Diamond Hill Capital, Laurion Capital Management, and Gates Capital Management. In terms of the portfolio weights assigned to each position Madison Avenue Partners allocated the biggest weight to Carrier Global Corporation (NYSE:CARR), around 17.2% of its 13F portfolio. DSAM Partners is also relatively very bullish on the stock, dishing out 10.34 percent of its 13F equity portfolio to CARR.

As one would reasonably expect, key hedge funds have been driving this bullishness. Southpoint Capital Advisors, managed by John Smith Clark, created the biggest position in Carrier Global Corporation (NYSE:CARR). Southpoint Capital Advisors had $266.6 million invested in the company at the end of the quarter. Mason Hawkins’s Southeastern Asset Management also made a $197.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Ric Dillon’s Diamond Hill Capital, Benjamin A. Smith’s Laurion Capital Management, and Jeffrey Gates’s Gates Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Carrier Global Corporation (NYSE:CARR) but similarly valued. We will take a look at Lennar Corporation (NYSE:LEN), Energy Transfer L.P. (NYSE:ET), Church & Dwight Co., Inc. (NYSE:CHD), MarketAxess Holdings Inc. (NASDAQ:MKTX), Keysight Technologies Inc (NYSE:KEYS), Wipro Limited (NYSE:WIT), and Entergy Corporation (NYSE:ETR). This group of stocks’ market valuations resemble CARR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LEN 55 1692845 -2
ET 31 552361 -2
CHD 33 508177 -3
MKTX 33 918191 6
KEYS 47 564484 7
WIT 7 59120 0
ETR 32 953385 -2
Average 34 749795 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $750 million. That figure was $1525 million in CARR’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand Wipro Limited (NYSE:WIT) is the least popular one with only 7 bullish hedge fund positions. Carrier Global Corporation (NYSE:CARR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CARR is 78.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on CARR as the stock returned 34.3% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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