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Hedge Funds Keep Steady On Carpenter Technology Corporation (CRS)

In this article you are going to find out whether hedge funds think Carpenter Technology Corporation (NYSE:CRS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hedge fund interest in Carpenter Technology Corporation (NYSE:CRS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare CRS to other stocks including Sixth Street Specialty Lending, Inc. (NYSE:TSLX), Methanex Corporation (NASDAQ:MEOH), and Boise Cascade Co (NYSE:BCC) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a multitude of tools shareholders use to value their holdings. A duo of the less known tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the best money managers can beat their index-focused peers by a superb margin (see the details here).

Joe Huber - Huber Capital Management

Joe Huber of Huber Capital Management

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 surrounding Carpenter Technology Corporation (NYSE:CRS).

What have hedge funds been doing with Carpenter Technology Corporation (NYSE:CRS)?

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in CRS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Millennium Management held the most valuable stake in Carpenter Technology Corporation (NYSE:CRS), which was worth $13.5 million at the end of the third quarter. On the second spot was Huber Capital Management which amassed $6.5 million worth of shares. Fisher Asset Management, Royce & Associates, and D E Shaw 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 Huber Capital Management allocated the biggest weight to Carpenter Technology Corporation (NYSE:CRS), around 1.18% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to CRS.

Judging by the fact that Carpenter Technology Corporation (NYSE:CRS) has experienced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely in the first quarter. At the top of the heap, Noam Gottesman’s GLG Partners said goodbye to the biggest stake of the 750 funds tracked by Insider Monkey, comprising about $1.5 million in stock, and Ray Dalio’s Bridgewater Associates was right behind this move, as the fund sold off about $0.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Carpenter Technology Corporation (NYSE:CRS). These stocks are Sixth Street Specialty Lending, Inc. (NYSE:TSLX), Methanex Corporation (NASDAQ:MEOH), Boise Cascade Co (NYSE:BCC), and Southwestern Energy Company (NYSE:SWN). All of these stocks’ market caps match CRS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TSLX 13 34398 3
MEOH 12 46085 -4
BCC 18 37882 -6
SWN 17 66169 2
Average 15 46134 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $48 million in CRS’s case. Boise Cascade Co (NYSE:BCC) is the most popular stock in this table. On the other hand Methanex Corporation (NASDAQ:MEOH) is the least popular one with only 12 bullish hedge fund positions. Carpenter Technology Corporation (NYSE:CRS) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on CRS, though not to the same extent, as the stock returned 22.1% during the first two months and twenty five days of the second quarter and outperformed the market as well.

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