Is Carter’s, Inc. (CRI) A Good Stock To Buy?

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Carter’s, Inc. (NYSE:CRI) from the perspective of those elite funds.

Is Carter’s, Inc. (NYSE:CRI) a safe investment now? Hedge funds are in a pessimistic mood. The number of bullish hedge fund positions dropped by 3 in recent months. CRI was in 35 hedge funds’ portfolios at the end of September. There were 38 hedge funds in our database with CRI 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 Six Flags Entertainment Corp (NYSE:SIX), Servicemaster Global Holdings Inc (NYSE:SERV), and Copart, Inc. (NASDAQ:CPRT) 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.

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Now, let’s take a gander at the recent action surrounding Carter’s, Inc. (NYSE:CRI).

Hedge fund activity in Carter’s, Inc. (NYSE:CRI)

At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 8% from the second quarter of 2016. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Hound Partners, managed by Jonathan Auerbach, holds the biggest position in Carter’s, Inc. (NYSE:CRI). The fund reportedly holds a $189.8 million position in the stock, comprising 5.1% of its 13F portfolio. The second largest stake is held by Darsana Capital Partners, led by Anand Desai, holding a $104.1 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise David Gallo’s Valinor Management LLC, Karthik Sarma’s SRS Investment Management and Cliff Asness’s AQR Capital Management.