Hedge Funds Have Never Been This Bullish On Clean Harbors Inc (CLH)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Clean Harbors Inc (NYSE:CLH).

Clean Harbors Inc (NYSE:CLH) investors should be aware of an increase in enthusiasm from smart money of late. CLH was in 27 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with CLH holdings at the end of the previous quarter. Our calculations also showed that clh isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Andrew Sandler

We’re going to take a glance at the recent hedge fund action surrounding Clean Harbors Inc (NYSE:CLH).

How are hedge funds trading Clean Harbors Inc (NYSE:CLH)?

At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the fourth quarter of 2018. By comparison, 15 hedge funds held shares or bullish call options in CLH a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

No of Hedge Funds with CLH Positions

The largest stake in Clean Harbors Inc (NYSE:CLH) was held by Renaissance Technologies, which reported holding $116.7 million worth of stock at the end of March. It was followed by AQR Capital Management with a $68.2 million position. Other investors bullish on the company included Impax Asset Management, Winton Capital Management, and Sandler Capital Management.

As aggregate interest increased, some big names have jumped into Clean Harbors Inc (NYSE:CLH) headfirst. Sandler Capital Management, managed by Andrew Sandler, initiated the biggest call position in Clean Harbors Inc (NYSE:CLH). Sandler Capital Management had $30 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also initiated a $26.1 million position during the quarter. The following funds were also among the new CLH investors: Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Andrew Sandler’s Sandler Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Clean Harbors Inc (NYSE:CLH) but similarly valued. These stocks are MSA Safety Incorporated (NYSE:MSA), Equity Commonwealth (NYSE:EQC), Nomad Foods Limited (NYSE:NOMD), and Plains GP Holdings LP (NYSE:PAGP). This group of stocks’ market valuations match CLH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSA 17 103105 0
EQC 21 217004 4
NOMD 42 518787 11
PAGP 16 223677 -2
Average 24 265643 3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was $417 million in CLH’s case. Nomad Foods Limited (NYSE:NOMD) is the most popular stock in this table. On the other hand Plains GP Holdings LP (NYSE:PAGP) is the least popular one with only 16 bullish hedge fund positions. Clean Harbors Inc (NYSE:CLH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CLH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLH were disappointed as the stock returned -10.7% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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