Hedge Funds Have Never Been This Bullish On Casella Waste Systems Inc. (CWST)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Casella Waste Systems Inc. (NASDAQ:CWST).

Casella Waste Systems Inc. (NASDAQ:CWST) was in 26 hedge funds’ portfolios at the end of June. 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. CWST investors should be aware of an increase in enthusiasm from smart money of late. There were 20 hedge funds in our database with CWST positions at the end of the first quarter. Our calculations also showed that CWST isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. 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 79 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.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 we’re going to go over the latest hedge fund action encompassing Casella Waste Systems Inc. (NASDAQ:CWST).

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

At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CWST over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is CWST A Good Stock To Buy?

More specifically, Renaissance Technologies was the largest shareholder of Casella Waste Systems Inc. (NASDAQ:CWST), with a stake worth $68.1 million reported as of the end of June. Trailing Renaissance Technologies was GAMCO Investors, which amassed a stake valued at $9.8 million. Millennium Management, Citadel Investment Group, and Tudor Investment Corp 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 Autonomy Capital allocated the biggest weight to Casella Waste Systems Inc. (NASDAQ:CWST), around 0.38% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, earmarking 0.31 percent of its 13F equity portfolio to CWST.

Now, specific money managers were breaking ground themselves. AlphaCrest Capital Management, managed by Mika Toikka, initiated the largest position in Casella Waste Systems Inc. (NASDAQ:CWST). AlphaCrest Capital Management had $2.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $1.4 million investment in the stock during the quarter. The following funds were also among the new CWST investors: Robert Charles Gibbins’s Autonomy Capital, Donald Sussman’s Paloma Partners, and Jinghua Yan’s TwinBeech Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Casella Waste Systems Inc. (NASDAQ:CWST) but similarly valued. We will take a look at Ingevity Corporation (NYSE:NGVT), Prospect Capital Corporation (NASDAQ:PSEC), Kontoor Brands, Inc. (NASDAQ:KTB), Liberty Latin America Ltd. (NASDAQ:LILA), Vertex, Inc. (NASDAQ:VERX), Cabot Corporation (NYSE:CBT), and Ameresco Inc (NYSE:AMRC). This group of stocks’ market valuations are similar to CWST’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NGVT 21 316763 1
PSEC 11 48102 4
KTB 23 186225 7
LILA 16 137765 2
VERX 8 35739 -3
CBT 18 83575 -5
AMRC 15 74599 -1
Average 16 126110 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $115 million in CWST’s case. Kontoor Brands, Inc. (NASDAQ:KTB) is the most popular stock in this table. On the other hand Vertex, Inc. (NASDAQ:VERX) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Casella Waste Systems Inc. (NASDAQ:CWST) is more popular among hedge funds. Our overall hedge fund sentiment score for CWST 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24.9% in 2021 through October 15th but still managed to beat the market by 4.5 percentage points. Hedge funds were also right about betting on CWST as the stock returned 26.1% since the end of June (through 10/15) 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.