Hedge Funds Are Crazy About GFL Environmental Inc. (GFL)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about GFL Environmental Inc. (NYSE:GFL).

Is GFL Environmental Inc. (NYSE:GFL) a buy right now? The smart money was in an optimistic mood. The number of long hedge fund bets inched up by 4 recently. GFL Environmental Inc. (NYSE:GFL) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that GFL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Harold Levy Iridian Asset Management

Harold Levy of Iridian Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Now let’s view the recent hedge fund action regarding GFL Environmental Inc. (NYSE:GFL).

Do Hedge Funds Think GFL Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in GFL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Aaron Cowen’s Suvretta Capital Management has the most valuable position in GFL Environmental Inc. (NYSE:GFL), worth close to $159 million, amounting to 2.4% of its total 13F portfolio. The second most bullish fund manager is Highbridge Capital Management, which holds a $80.9 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Guy Shahar’s DSAM Partners, Scott Kapnick’s HPS Investment Partners and Adam Wyden’s ADW Capital. In terms of the portfolio weights assigned to each position HPS Investment Partners allocated the biggest weight to GFL Environmental Inc. (NYSE:GFL), around 38.65% of its 13F portfolio. ADW Capital is also relatively very bullish on the stock, earmarking 14.47 percent of its 13F equity portfolio to GFL.

As one would reasonably expect, specific money managers were breaking ground themselves. 1623 Capital, managed by The Motley Fool, assembled the biggest position in GFL Environmental Inc. (NYSE:GFL). 1623 Capital had $3.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $2.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and David Cohen and Harold Levy’s Iridian Asset Management.

Let’s now take a look at hedge fund activity in other stocks similar to GFL Environmental Inc. (NYSE:GFL). These stocks are The Interpublic Group of Companies Inc (NYSE:IPG), Avalara, Inc. (NYSE:AVLR), Allegion plc (NYSE:ALLE), Newell Brands Inc. (NASDAQ:NWL), LPL Financial Holdings Inc (NASDAQ:LPLA), Westlake Chemical Corporation (NYSE:WLK), and Universal Health Services, Inc. (NYSE:UHS). This group of stocks’ market values are closest to GFL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IPG 29 709187 -9
AVLR 41 994280 -15
ALLE 27 969085 0
NWL 24 1952399 1
LPLA 38 1496713 -5
WLK 26 410629 4
UHS 43 882608 4
Average 32.6 1059272 -2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $1059 million. That figure was $561 million in GFL’s case. Universal Health Services, Inc. (NYSE:UHS) is the most popular stock in this table. On the other hand Newell Brands Inc. (NASDAQ:NWL) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks GFL Environmental Inc. (NYSE:GFL) is even less popular than NWL. Our overall hedge fund sentiment score for GFL is 39. 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. Hedge funds dodged a bullet by taking a bearish stance towards GFL. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th but managed to beat the market again by 7.7 percentage points. Unfortunately GFL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); GFL investors were disappointed as the stock returned -9.2% since the end of the first quarter (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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