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Hedge Funds Are Piling Into CIRCOR International, Inc. (CIR)

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards CIRCOR International, Inc. (NYSE:CIR).

CIRCOR International, Inc. (NYSE:CIR) was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. CIR investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 10 hedge funds in our database with CIR positions at the end of the previous quarter. Our calculations also showed that CIR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the new hedge fund action surrounding CIRCOR International, Inc. (NYSE:CIR).

What have hedge funds been doing with CIRCOR International, Inc. (NYSE:CIR)?

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in CIR a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is CIR A Good Stock To Buy?

Among these funds, GAMCO Investors held the most valuable stake in CIRCOR International, Inc. (NYSE:CIR), which was worth $65.2 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $32.5 million worth of shares. TIG Advisors, DC Capital Partners, and Prospector Partners 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 DC Capital Partners allocated the biggest weight to CIRCOR International, Inc. (NYSE:CIR), around 8.24% of its 13F portfolio. TIG Advisors is also relatively very bullish on the stock, setting aside 0.7 percent of its 13F equity portfolio to CIR.

Consequently, key money managers were breaking ground themselves. Brant Point Investment Management, managed by Ira Unschuld, established the biggest position in CIRCOR International, Inc. (NYSE:CIR). Brant Point Investment Management had $3.2 million invested in the company at the end of the quarter. David E. Shaw’s D E Shaw also initiated a $1.2 million position during the quarter. The other funds with brand new CIR positions are Dmitry Balyasny’s Balyasny Asset Management, Ira Unschuld’s Brant Point Investment Management, and Marc Majzner’s Clearline Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CIRCOR International, Inc. (NYSE:CIR) but similarly valued. We will take a look at Ameresco Inc (NYSE:AMRC), Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM), Garrett Motion Inc. (NYSE:GTX), and ChipMOS Technologies (Bermuda) Ltd (NASDAQ:IMOS). All of these stocks’ market caps are closest to CIR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMRC 6 33172 1
RYTM 8 200857 -2
GTX 27 207710 4
IMOS 3 33579 1
Average 11 118830 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $132 million in CIR’s case. Garrett Motion Inc. (NYSE:GTX) is the most popular stock in this table. On the other hand ChipMOS Technologies (Bermuda) Ltd (NASDAQ:IMOS) is the least popular one with only 3 bullish hedge fund positions. CIRCOR International, Inc. (NYSE:CIR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on CIR as the stock returned 18.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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