The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Carrier Global Corporation (NYSE:CARR) based on those filings.
Is CARR a good stock to buy now? Carrier Global Corporation (NYSE:CARR) shareholders have witnessed an increase in hedge fund interest of late. Carrier Global Corporation (NYSE:CARR) was in 49 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CARR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a gander at the latest hedge fund action surrounding Carrier Global Corporation (NYSE:CARR).
Do Hedge Funds Think CARR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CARR over the last 21 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Southpoint Capital Advisors was the largest shareholder of Carrier Global Corporation (NYSE:CARR), with a stake worth $366.5 million reported as of the end of September. Trailing Southpoint Capital Advisors was Diamond Hill Capital, which amassed a stake valued at $183.3 million. Gates Capital Management, Arrowstreet Capital, and Theleme Partners 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 Madison Avenue Partners allocated the biggest weight to Carrier Global Corporation (NYSE:CARR), around 16.74% of its 13F portfolio. Southpoint Capital Advisors is also relatively very bullish on the stock, designating 8.34 percent of its 13F equity portfolio to CARR.
Consequently, some big names have jumped into Carrier Global Corporation (NYSE:CARR) headfirst. Theleme Partners, managed by Patrick Degorce, established the most outsized position in Carrier Global Corporation (NYSE:CARR). Theleme Partners had $119.2 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $61.5 million position during the quarter. The other funds with new positions in the stock are Mark Coe’s Intrinsic Edge Capital, Brad Farber’s Atika Capital, and Brian Sheehy’s Iszo Capital.
Let’s now review hedge fund activity in other stocks similar to Carrier Global Corporation (NYSE:CARR). These stocks are Hormel Foods Corporation (NYSE:HRL), The Kroger Co. (NYSE:KR), American Water Works Company, Inc. (NYSE:AWK), HP Inc. (NYSE:HPQ), Consolidated Edison, Inc. (NYSE:ED), Parker-Hannifin Corporation (NYSE:PH), and Liberty Broadband Corp (NASDAQ:LBRDK). All of these stocks’ market caps resemble CARR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.4 hedge funds with bullish positions and the average amount invested in these stocks was $1632 million. That figure was $1880 million in CARR’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Consolidated Edison, Inc. (NYSE:ED) is the least popular one with only 18 bullish hedge fund positions. Carrier Global Corporation (NYSE:CARR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CARR is 80.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CARR as the stock returned 22.4% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.