Here’s What Hedge Funds Think About Casella Waste Systems Inc. (CWST)

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Casella Waste Systems Inc. (NASDAQ:CWST) in order to identify whether reputable and successful top money managers continue to believe in its potential.

Is Casella Waste Systems Inc. (NASDAQ:CWST) a marvelous investment now? Investors who are in the know are getting less bullish. The number of long hedge fund positions were trimmed by 4 in recent months. Our calculations also showed that CWST isn’t among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are plenty of formulas shareholders can use to size up their holdings. Some of the less utilized formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outclass the market by a very impressive margin (see the details here).

Richard Driehaus

Let’s take a peek at the key hedge fund action regarding Casella Waste Systems Inc. (NASDAQ:CWST).

Hedge fund activity in Casella Waste Systems Inc. (NASDAQ:CWST)

At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the fourth quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in CWST a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


More specifically, Renaissance Technologies was the largest shareholder of Casella Waste Systems Inc. (NASDAQ:CWST), with a stake worth $111.9 million reported as of the end of March. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $11.5 million. Portolan Capital Management, Skylands Capital, and Driehaus Capital were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Casella Waste Systems Inc. (NASDAQ:CWST) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few fund managers that slashed their entire stakes in the third quarter. It’s worth mentioning that Brandon Osten’s Venator Capital Management cut the biggest investment of all the hedgies tracked by Insider Monkey, comprising close to $2.6 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $2 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds in the third quarter.

Let’s check out 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 Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), Qudian Inc. (NYSE:QD), Cardtronics plc (NASDAQ:CATM), and AeroVironment, Inc. (NASDAQ:AVAV). This group of stocks’ market values are similar to CWST’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KTOS 17 112725 5
QD 18 52281 3
CATM 18 402332 0
AVAV 13 40715 4
Average 16.5 152013 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $168 million in CWST’s case. Qudian Inc. (NYSE:QD) is the most popular stock in this table. On the other hand AeroVironment, Inc. (NASDAQ:AVAV) is the least popular one with only 13 bullish hedge fund positions. Casella Waste Systems Inc. (NASDAQ:CWST) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on CWST as the stock returned 15% during the same time frame and outperformed the market by an even larger margin.

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