Is CIRCOR International, Inc. (CIR) Going to Frustrate Investors?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

CIRCOR International, Inc. (NYSE:CIR) was in 11 hedge funds’ portfolios at the end of September. CIR shareholders have witnessed an increase in enthusiasm from smart money recently. There were 7 hedge funds in our database with CIR positions at the end of June. At the end of this article we will also compare CIR to other stocks including Forward Pharma A/S (NASDAQ:FWP), US Ecology Inc. (NASDAQ:ECOL), and Healthways, Inc. (NASDAQ:HWAY) to get a better sense of its popularity.

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.

What does the smart money think about CIRCOR International, Inc. (NYSE:CIR)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 57% jump from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in CIR at the beginning of this year, which has nearly doubled in 2016. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in CIRCOR International, Inc. (NYSE:CIR), worth close to $91.9 million. On GAMCO Investors’ heels is Chuck Royce of Royce & Associates, with an $81.8 million position. Some other professional money managers with similar optimism include John D. Gillespie’s Prospector Partners, Martin Whitman’s Third Avenue Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

As aggregate interest increased, some big names have jumped into CIRCOR International, Inc. (NYSE:CIR) headfirst. Citadel Investment Group assembled the most outsized position in CIRCOR International, Inc. (NYSE:CIR). Citadel Investment Group had $0.6 million invested in the company at the end of the quarter. Millennium Management, one of the biggest hedge funds in the world, also initiated a $0.5 million position during the quarter. The following funds were also among the new CIR investors: Cliff Asness’ AQR Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CIRCOR International, Inc. (NYSE:CIR) but similarly valued. These stocks are Forward Pharma A/S (NASDAQ:FWP), US Ecology Inc. (NASDAQ:ECOL), Healthways, Inc. (NASDAQ:HWAY), and Rush Enterprises, Inc. (NASDAQ:RUSHA). This group of stocks’ market values match CIR’s market value.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $185 million in CIR’s case. Healthways, Inc. (NASDAQ:HWAY) is the most popular stock in this table. On the other hand US Ecology Inc. (NASDAQ:ECOL) is the least popular one with only 8 bullish hedge fund positions. CIRCOR International, Inc. (NYSE:CIR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HWAY might be a better candidate to consider taking a long position in.

Disclosure: None