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Is Catalent Inc (CTLT) A Good Stock To Buy?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Catalent Inc (NYSE:CTLT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Catalent Inc (NYSE:CTLT) a buy, sell, or hold? The smart money is betting on the stock. The number of long hedge fund positions advanced by 5 lately. Our calculations also showed that CTLT isn’t among the 30 most popular stocks among hedge funds (view the video below). CTLT was in 20 hedge funds’ portfolios at the end of the second quarter of 2019. There were 15 hedge funds in our database with CTLT positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are perceived as slow, old investment vehicles of years past. While there are greater than 8000 funds in operation at present, We look at the moguls of this group, about 750 funds. These investment experts shepherd bulk of the hedge fund industry’s total asset base, and by following their best investments, Insider Monkey has come up with a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Andreas Halvorsen

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the fresh hedge fund action regarding Catalent Inc (NYSE:CTLT).

Hedge fund activity in Catalent Inc (NYSE:CTLT)

At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CTLT over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CTLT_oct2019

The largest stake in Catalent Inc (NYSE:CTLT) was held by Highline Capital Management, which reported holding $111.5 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $90.7 million position. Other investors bullish on the company included Viking Global, D E Shaw, and Partner Fund Management.

As industrywide interest jumped, some big names were leading the bulls’ herd. Highline Capital Management, managed by Jacob Doft, established the most outsized position in Catalent Inc (NYSE:CTLT). Highline Capital Management had $111.5 million invested in the company at the end of the quarter. Christopher James’s Partner Fund Management also made a $33.4 million investment in the stock during the quarter. The following funds were also among the new CTLT investors: Anand Parekh’s Alyeska Investment Group, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Guy Shahar’s DSAM Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Catalent Inc (NYSE:CTLT) but similarly valued. These stocks are Bio-Techne Corporation (NASDAQ:TECH), RPM International Inc. (NYSE:RPM), Hyatt Hotels Corporation (NYSE:H), and RenaissanceRe Holdings Ltd. (NYSE:RNR). This group of stocks’ market valuations match CTLT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TECH 24 352676 6
RPM 25 454818 4
H 23 846946 -1
RNR 20 720820 0
Average 23 593815 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $594 million. That figure was $427 million in CTLT’s case. RPM International Inc. (NYSE:RPM) is the most popular stock in this table. On the other hand RenaissanceRe Holdings Ltd. (NYSE:RNR) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Catalent Inc (NYSE:CTLT) is even less popular than RNR. Hedge funds dodged a bullet by taking a bearish stance towards CTLT. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CTLT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CTLT investors were disappointed as the stock returned -12.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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