Is CHRW A Good Stock To Buy Now According To Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) in this article.

Is CHRW a good stock to buy now? C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 32. Our calculations also showed that CHRW 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.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

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. Keeping this in mind let’s take a peek at the key hedge fund action surrounding C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).

Do Hedge Funds Think CHRW Is A Good Stock To Buy Now?

At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CHRW over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CHRW A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the biggest position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). AQR Capital Management has a $154.3 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $116.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions comprise Renaissance Technologies, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Element Capital Management allocated the biggest weight to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), around 1.2% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, earmarking 0.92 percent of its 13F equity portfolio to CHRW.

Seeing as C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few funds that slashed their full holdings in the third quarter. Intriguingly, Steve Cohen’s Point72 Asset Management said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $20 million in stock. James Dondero’s fund, Highland Capital Management, also cut its stock, about $2.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 6 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) but similarly valued. We will take a look at Cardinal Health, Inc. (NYSE:CAH), IDEX Corporation (NYSE:IEX), Baker Hughes Company (NYSE:BKR), Genuine Parts Company (NYSE:GPC), FMC Corporation (NYSE:FMC), Duke Realty Corporation (NYSE:DRE), and Black Knight, Inc. (NYSE:BKI). This group of stocks’ market valuations are similar to CHRW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAH 45 1006225 -4
IEX 26 593094 -5
BKR 28 466167 1
GPC 23 170601 3
FMC 41 525635 -1
DRE 22 145143 3
BKI 41 947273 -3
Average 32.3 550591 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $551 million. That figure was $531 million in CHRW’s case. Cardinal Health, Inc. (NYSE:CAH) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is even less popular than DRE. Our overall hedge fund sentiment score for CHRW is 19.6. 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. Hedge funds dodged a bullet by taking a bearish stance towards CHRW. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th but managed to beat the market again by 15.8 percentage points. Unfortunately CHRW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CHRW investors were disappointed as the stock returned -9.7% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market so far in 2020.

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