Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Clean Harbors Inc (NYSE:CLH) has seen a decrease in activity from the world’s largest hedge funds of late. CLH was in 13 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with CLH holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as IBERIABANK Corporation (NASDAQ:IBKC), The Timken Company (NYSE:TKR), and Texas Roadhouse Inc (NASDAQ:TXRH) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about Clean Harbors Inc (NYSE:CLH)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CLH over the last 5 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Orbis Investment Management, led by William B. Gray, holds the largest position in Clean Harbors Inc (NYSE:CLH). Orbis Investment Management has a $49.5 million position in the stock. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, with a $37.6 million position. Other hedge funds and institutional investors with similar optimism include Ian Simm’s Impax Asset Management, James A. Noonan’s Pivot Point Capital and Cliff Asness’ AQR Capital Management. We should note that two of these hedge funds (Orbis Investment Management and Impax Asset Management) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Seeing as Clean Harbors Inc (NYSE:CLH) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there is a sect of fund managers who sold off their full holdings by the end of the third quarter. At the top of the heap, David L Briggs’ Dulcet Capital cashed in the biggest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $6.8 million in stock, and Mark Coe’s Coe Capital Management was right behind this move, as the fund sold off about $3.9 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Clean Harbors Inc (NYSE:CLH) but similarly valued. We will take a look at IBERIABANK Corporation (NASDAQ:IBKC), The Timken Company (NYSE:TKR), Texas Roadhouse Inc (NASDAQ:TXRH), and Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL). All of these stocks’ market caps resemble CLH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $175 million in CLH’s case. The Timken Company (NYSE:TKR) is the most popular stock in this table. On the other hand Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Clean Harbors Inc (NYSE:CLH) is even less popular than MPEL. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.