Hedge Funds Are Nibbling On Chart Industries, Inc. (GTLS)

In this article we will take a look at whether hedge funds think Chart Industries, Inc. (NASDAQ:GTLS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Chart Industries, Inc. (NASDAQ:GTLS) shareholders have witnessed an increase in hedge fund interest lately. 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.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the key hedge fund action surrounding Chart Industries, Inc. (NASDAQ:GTLS).

What does smart money think about Chart Industries, Inc. (NASDAQ:GTLS)?

At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in GTLS 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.

More specifically, Fisher Asset Management was the largest shareholder of Chart Industries, Inc. (NASDAQ:GTLS), with a stake worth $23.8 million reported as of the end of September. Trailing Fisher Asset Management was Citadel Investment Group, which amassed a stake valued at $21.8 million. Encompass Capital Advisors, Millennium Management, and Deep Basin Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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, dishing out 2.11 percent of its 13F equity portfolio to GTLS.

As industrywide interest jumped, some big names were breaking ground themselves. Encompass Capital Advisors, managed by Todd J. Kantor, created the most outsized 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 take a look at 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 Inc. (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 valuations match GTLS’s market valuation.

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 Inc. (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 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on GTLS as the stock returned 44.7% so far in Q2 (through June 17th) 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.