In this article we will analyze whether The Carlyle Group Inc. (NASDAQ:CG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is CG a good stock to buy now? The smart money was betting on the stock. The number of long hedge fund positions increased by 6 lately. The Carlyle Group Inc. (NASDAQ:CG) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. Our calculations also showed that CG 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind let’s take a gander at the latest hedge fund action encompassing The Carlyle Group Inc. (NASDAQ:CG).
Do Hedge Funds Think CG Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 75% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in CG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Alkeon Capital Management held the most valuable stake in The Carlyle Group Inc. (NASDAQ:CG), which was worth $134.3 million at the end of the third quarter. On the second spot was Markel Gayner Asset Management which amassed $30.1 million worth of shares. PEAK6 Capital Management, Gillson Capital, and Citadel Investment Group 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 Gillson Capital allocated the biggest weight to The Carlyle Group Inc. (NASDAQ:CG), around 1.38% of its 13F portfolio. Markel Gayner Asset Management is also relatively very bullish on the stock, setting aside 0.51 percent of its 13F equity portfolio to CG.
As one would reasonably expect, key money managers have jumped into The Carlyle Group Inc. (NASDAQ:CG) headfirst. Gillson Capital, managed by Daniel Johnson, assembled the largest position in The Carlyle Group Inc. (NASDAQ:CG). Gillson Capital had $9.5 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $2.7 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Greg Eisner’s Engineers Gate Manager, and Brandon Haley’s Holocene Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The Carlyle Group Inc. (NASDAQ:CG) but similarly valued. We will take a look at Lyft, Inc. (NASDAQ:LYFT), Aspen Technology, Inc. (NASDAQ:AZPN), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), Farfetch Limited (NYSE:FTCH), GDS Holdings Limited (NASDAQ:GDS), Sociedad Quimica y Minera (NYSE:SQM), and The Scotts Miracle-Gro Company (NYSE:SMG). All of these stocks’ market caps are closest to CG’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 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $904 million. That figure was $191 million in CG’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 6 bullish hedge fund positions. The Carlyle Group Inc. (NASDAQ:CG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CG is 46. 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. A small number of hedge funds were also right about betting on CG as the stock returned 21.8% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.