Hedge Funds Are Selling Core Laboratories N.V. (CLB)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Core Laboratories N.V. (NYSE:CLB) based on those filings.

Core Laboratories N.V. (NYSE:CLB) has seen a decrease in hedge fund interest of late. CLB was in 16 hedge funds’ portfolios at the end of March. There were 25 hedge funds in our database with CLB positions at the end of the previous quarter. Our calculations also showed that CLB 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the recent hedge fund action encompassing Core Laboratories N.V. (NYSE:CLB).

Hedge fund activity in Core Laboratories N.V. (NYSE:CLB)

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in CLB a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Core Laboratories N.V. (NYSE:CLB), with a stake worth $9.6 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $6.7 million. Luminus Management, D E Shaw, and Winton Capital Management 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 Luminus Management allocated the biggest weight to Core Laboratories N.V. (NYSE:CLB), around 0.64% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.06 percent of its 13F equity portfolio to CLB.

Judging by the fact that Core Laboratories N.V. (NYSE:CLB) has faced falling interest from hedge fund managers, it’s easy to see that there exists a select few hedgies who were dropping their full holdings last quarter. It’s worth mentioning that Robert Joseph Caruso’s Select Equity Group dropped the biggest investment of the 750 funds watched by Insider Monkey, worth close to $54.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $3.6 million worth. These transactions are important to note, as total hedge fund interest dropped by 9 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Core Laboratories N.V. (NYSE:CLB) but similarly valued. These stocks are Oaktree Specialty Lending Corporation (NASDAQ:OCSL), Grid Dynamics Holdings, Inc. (NASDAQ:GDYN), Stoneridge, Inc. (NYSE:SRI), and Blackrock Resources & Commodities Strategy Trust (NYSE:BCX). This group of stocks’ market caps resemble CLB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OCSL 13 41797 -5
GDYN 12 64056 -3
SRI 13 32212 0
BCX 6 1762 4
Average 11 34957 -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 $35 million. That figure was $34 million in CLB’s case. Oaktree Specialty Lending Corporation (NASDAQ:OCSL) is the most popular stock in this table. On the other hand Blackrock Resources & Commodities Strategy Trust (NYSE:BCX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Core Laboratories N.V. (NYSE:CLB) 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 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on CLB as the stock returned 97.2% so far in Q2 (through June 25th) 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.