At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Clarus Corporation (NASDAQ:CLAR) makes for a good investment right now.
Is CLAR a good stock to buy now? Clarus Corporation (NASDAQ:CLAR) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that CLAR 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). 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 Orchard Therapeutics plc (NASDAQ:ORTX), Viomi Technology Co., Ltd (NASDAQ:VIOT), and KNOT Offshore Partners LP (NYSE:KNOP) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most traders, hedge funds are seen as unimportant, old financial vehicles of the past. While there are greater than 8000 funds in operation today, Our researchers look at the aristocrats of this group, about 850 funds. These investment experts shepherd the majority of the smart money’s total capital, and by tailing their unrivaled stock picks, Insider Monkey has deciphered numerous investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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 view the recent hedge fund action encompassing Clarus Corporation (NASDAQ:CLAR).
Do Hedge Funds Think CLAR Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CLAR over the last 21 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Greenhouse Funds was the largest shareholder of Clarus Corporation (NASDAQ:CLAR), with a stake worth $37.2 million reported as of the end of September. Trailing Greenhouse Funds was Renaissance Technologies, which amassed a stake valued at $6.5 million. Plaisance Capital, Royce & Associates, and Intrinsic Edge Capital 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 Plaisance Capital allocated the biggest weight to Clarus Corporation (NASDAQ:CLAR), around 8.13% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, dishing out 5.66 percent of its 13F equity portfolio to CLAR.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Clarus Corporation (NASDAQ:CLAR) but similarly valued. These stocks are Orchard Therapeutics plc (NASDAQ:ORTX), Viomi Technology Co., Ltd (NASDAQ:VIOT), KNOT Offshore Partners LP (NYSE:KNOP), D8 Holdings Corp. (NYSE:DEH), Kala Pharmaceuticals, Inc. (NASDAQ:KALA), Univest Financial Corporation (NASDAQ:UVSP), and Progenity, Inc. (NASDAQ:PROG). All of these stocks’ market caps resemble CLAR’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 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $59 million in CLAR’s case. D8 Holdings Corp. (NYSE:DEH) is the most popular stock in this table. On the other hand KNOT Offshore Partners LP (NYSE:KNOP) is the least popular one with only 3 bullish hedge fund positions. Clarus Corporation (NASDAQ:CLAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLAR is 70.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately CLAR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CLAR were disappointed as the stock returned 7.3% since the end of September (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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.