Hedge Funds Started Cashing Out Of Cintas Corporation (CTAS)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Cintas Corporation (NASDAQ:CTAS).

Cintas Corporation (NASDAQ:CTAS) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that CTAS 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.

According to most stock holders, hedge funds are perceived as underperforming, old financial vehicles of the past. While there are greater than 8000 funds trading today, Our experts hone in on the masters of this group, approximately 850 funds. It is estimated that this group of investors oversee the majority of the smart money’s total asset base, and by observing their finest stock picks, Insider Monkey has determined a few investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Richard Chilton of Chilton Investment Company

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the latest hedge fund action encompassing Cintas Corporation (NASDAQ:CTAS).

What have hedge funds been doing with Cintas Corporation (NASDAQ:CTAS)?

At the end of the first quarter, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CTAS over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Richard Chilton’s Chilton Investment Company has the largest position in Cintas Corporation (NASDAQ:CTAS), worth close to $66.1 million, corresponding to 2.5% of its total 13F portfolio. On Chilton Investment Company’s heels is AQR Capital Management, managed by Cliff Asness, which holds a $58.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Robert Joseph Caruso’s Select Equity Group, Panayotis Takis Sparaggis’s Alkeon Capital Management and Peter Simmie’s Bristol Gate Capital Partners. In terms of the portfolio weights assigned to each position Bristol Gate Capital Partners allocated the biggest weight to Cintas Corporation (NASDAQ:CTAS), around 4.41% of its 13F portfolio. Harbor Spring Capital is also relatively very bullish on the stock, setting aside 2.59 percent of its 13F equity portfolio to CTAS.

Judging by the fact that Cintas Corporation (NASDAQ:CTAS) has faced a decline in interest from hedge fund managers, it’s safe to say that there were a few funds that decided to sell off their positions entirely in the third quarter. At the top of the heap, James Parsons’s Junto Capital Management said goodbye to the largest stake of all the hedgies followed by Insider Monkey, worth about $42.8 million in stock. Mark McMeans’s fund, Brasada Capital Management, also said goodbye to its stock, about $10.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Cintas Corporation (NASDAQ:CTAS). These stocks are China Unicom (Hong Kong) Limited (NYSE:CHU), Ameren Corporation (NYSE:AEE), Fastenal Company (NASDAQ:FAST), and Interactive Brokers Group, Inc. (NASDAQ:IBKR). This group of stocks’ market valuations match CTAS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHU 6 47948 -5
AEE 21 723627 -10
FAST 34 588054 1
IBKR 22 779568 -7
Average 20.75 534799 -5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $535 million. That figure was $458 million in CTAS’s case. Fastenal Company (NASDAQ:FAST) is the most popular stock in this table. On the other hand China Unicom (Hong Kong) Limited (NYSE:CHU) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Cintas Corporation (NASDAQ:CTAS) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on CTAS as the stock returned 43.1% so far in Q2 (through the end of May) 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.