With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Carrier Global Corporation (NYSE:CARR).
Is Carrier (CARR) stock a buy or sell? Investors who are in the know were becoming hopeful. The number of long hedge fund positions moved up by 3 recently. Carrier Global Corporation (NYSE:CARR) was in 52 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 49. 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 Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
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Do Hedge Funds Think CARR Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the third quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in CARR a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Carrier Global Corporation (NYSE:CARR) was held by Southpoint Capital Advisors, which reported holding $452.6 million worth of stock at the end of December. It was followed by Theleme Partners with a $210.9 million position. Other investors bullish on the company included Diamond Hill Capital, Gates Capital Management, and Laurion Capital Management. In terms of the portfolio weights assigned to each position Southpoint Capital Advisors allocated the biggest weight to Carrier Global Corporation (NYSE:CARR), around 7.89% of its 13F portfolio. Theleme Partners is also relatively very bullish on the stock, dishing out 6.92 percent of its 13F equity portfolio to CARR.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Electron Capital Partners, managed by Jos Shaver, initiated the biggest position in Carrier Global Corporation (NYSE:CARR). Electron Capital Partners had $34.4 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $8.5 million position during the quarter. The other funds with brand new CARR positions are Mark R. Freeman’s Socorro Asset Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Qing Li’s Sciencast Management.
Let’s now review hedge fund activity in other stocks similar to Carrier Global Corporation (NYSE:CARR). We will take a look at American International Group Inc (NYSE:AIG), Banco Santander (Brasil) SA (NYSE:BSBR), Mizuho Financial Group Inc. (NYSE:MFG), Alcon Inc. (NYSE:ALC), Tencent Music Entertainment Group (NYSE:TME), Wipro Limited (NYSE:WIT), and Zimmer Biomet Holdings Inc (NYSE:ZBH). This group of stocks’ market valuations match CARR’s market valuation.
|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 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $760 million. That figure was $2285 million in CARR’s case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 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 87. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on CARR as the stock returned 8.5% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.