The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Clarivate Plc (NYSE:CCC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Clarivate Plc (NYSE:CCC) a buy right now? Prominent investors were buying. The number of bullish hedge fund bets went up by 17 in recent months. Clarivate Plc (NYSE:CCC) was in 45 hedge funds’ portfolios at the end of June. The all time high for this statistics is 45. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CCC 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). There were 28 hedge funds in our database with CCC holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 56 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 review the key hedge fund action encompassing Clarivate Plc (NYSE:CCC).
Hedge fund activity in Clarivate Plc (NYSE:CCC)
At Q2’s end, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 61% from the first quarter of 2020. By comparison, 21 hedge funds held shares or bullish call options in CCC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Clarivate Plc (NYSE:CCC) was held by Select Equity Group, which reported holding $515.3 million worth of stock at the end of September. It was followed by D1 Capital Partners with a $203.7 million position. Other investors bullish on the company included 40 North Management, JS Capital, and Brahman Capital. In terms of the portfolio weights assigned to each position Antipodean Advisors allocated the biggest weight to Clarivate Plc (NYSE:CCC), around 13.14% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, setting aside 8.42 percent of its 13F equity portfolio to CCC.
As aggregate interest increased, some big names were breaking ground themselves. Maplelane Capital, managed by Leon Shaulov, created the biggest position in Clarivate Plc (NYSE:CCC). Maplelane Capital had $31.5 million invested in the company at the end of the quarter. Amit Nitin Doshi’s Harbor Spring Capital also initiated a $29.2 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Usman Waheed’s Strycker View Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Clarivate Plc (NYSE:CCC) but similarly valued. We will take a look at Charles River Laboratories International Inc. (NYSE:CRL), Natura &Co Holding S.A. (NYSE:NTCO), Brookfield Renewable Partners L.P. (NYSE:BEP), Elanco Animal Health Incorporated (NYSE:ELAN), James Hardie Industries plc (NYSE:JHX), IPG Photonics Corporation (NASDAQ:IPGP), and F5 Networks, Inc. (NASDAQ:FFIV). This group of stocks’ market values resemble CCC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $386 million. That figure was $1301 million in CCC’s case. Charles River Laboratories International Inc. (NYSE:CRL) is the most popular stock in this table. On the other hand Natura &Co Holding S.A. (NYSE:NTCO) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Clarivate Plc (NYSE:CCC) is more popular among hedge funds. Our overall hedge fund sentiment score for CCC is 90. 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 returned 33% in 2020 through the end of August but still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on CCC as the stock returned 31.8% since the end of June 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.