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How Did Copart, Inc. (CPRT) Compare Against Top Hedge Fund Stocks in 2019?

Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 41.1% in 2019 (through December 23) and outperformed the S&P 500 ETF by more than 10 percentage points. In this article we will study how hedge fund sentiment towards Copart, Inc. (NASDAQ:CPRT) changed during the third quarter and how the stock performed in comparison to hedge fund consensus stocks.

Is Copart, Inc. (NASDAQ:CPRT) a safe stock to buy now? The smart money is betting on the stock. The number of long hedge fund bets moved up by 6 lately. Our calculations also showed that CPRT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings). CPRT was in 36 hedge funds’ portfolios at the end of the third quarter of 2019. There were 30 hedge funds in our database with CPRT holdings at the end of the previous quarter.

At the moment there are dozens of gauges shareholders can use to evaluate publicly traded companies. A duo of the most underrated gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top fund managers can outperform the market by a very impressive amount (see the details here).

Aaron Cowen Suvretta Capital

Aaron Cowen of Suvretta Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s go over the key hedge fund action surrounding Copart, Inc. (NASDAQ:CPRT).

Hedge fund activity in Copart, Inc. (NASDAQ:CPRT)

At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CPRT over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

More specifically, Arrowstreet Capital was the largest shareholder of Copart, Inc. (NASDAQ:CPRT), with a stake worth $93.8 million reported as of the end of September. Trailing Arrowstreet Capital was Suvretta Capital Management, which amassed a stake valued at $58.1 million. Nitorum Capital, Millennium Management, and Renaissance Technologies 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 Nitorum Capital allocated the biggest weight to Copart, Inc. (NASDAQ:CPRT), around 3.27% of its 13F portfolio. GRT Capital Partners is also relatively very bullish on the stock, earmarking 3.25 percent of its 13F equity portfolio to CPRT.

As one would reasonably expect, key money managers were breaking ground themselves. Nitorum Capital, managed by Seth Rosen, established the biggest position in Copart, Inc. (NASDAQ:CPRT). Nitorum Capital had $56.2 million invested in the company at the end of the quarter. Renaissance Technologies also made a $50 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace, John Overdeck and David Siegel’s Two Sigma Advisors, and Vikas Lunia’s Lunia Capital.

Let’s go over hedge fund activity in other stocks similar to Copart, Inc. (NASDAQ:CPRT). We will take a look at IAC/InterActiveCorp (NASDAQ:IAC), Arista Networks Inc (NYSE:ANET), Keysight Technologies Inc (NYSE:KEYS), and Restaurant Brands International Inc (NYSE:QSR). This group of stocks’ market values resemble CPRT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IAC 51 2111302 4
ANET 20 178704 -8
KEYS 45 999981 6
QSR 55 4249554 16
Average 42.75 1884885 4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 42.75 hedge funds with bullish positions and the average amount invested in these stocks was $1885 million. That figure was $580 million in CPRT’s case. Restaurant Brands International Inc (NYSE:QSR) is the most popular stock in this table. On the other hand Arista Networks Inc (NYSE:ANET) is the least popular one with only 20 bullish hedge fund positions. Copart, Inc. (NASDAQ:CPRT) 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 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on CPRT as the stock returned 88.1% in 2019 through December 23rd and outperformed the market by an even larger margin.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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