At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Americold Realty Trust (NYSE:COLD).
Is COLD a good stock to buy? Prominent investors were buying. The number of bullish hedge fund positions rose by 1 recently. Americold Realty Trust (NYSE:COLD) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 31. Our calculations also showed that COLD 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). There were 29 hedge funds in our database with COLD positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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 leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 view the new hedge fund action encompassing Americold Realty Trust (NYSE:COLD).
Do Hedge Funds Think COLD Is A Good Stock To Buy Now?
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in COLD over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, D. E. Shaw’s D E Shaw has the largest position in Americold Realty Trust (NYSE:COLD), worth close to $49.2 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $37 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions include Jonathan Litt’s Land & Buildings Investment Management, Dmitry Balyasny’s Balyasny Asset Management and Jonathan Soros’s JS Capital. In terms of the portfolio weights assigned to each position Hudson Way Capital Management allocated the biggest weight to Americold Realty Trust (NYSE:COLD), around 5.72% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, designating 5.51 percent of its 13F equity portfolio to COLD.
As one would reasonably expect, key money managers have jumped into Americold Realty Trust (NYSE:COLD) headfirst. Land & Buildings Investment Management, managed by Jonathan Litt, assembled the most outsized position in Americold Realty Trust (NYSE:COLD). Land & Buildings Investment Management had $30 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also made a $7.6 million investment in the stock during the quarter. The following funds were also among the new COLD investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Mika Toikka’s AlphaCrest Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Americold Realty Trust (NYSE:COLD) but similarly valued. These stocks are Molson Coors Beverage Company (NYSE:TAP), nCino, Inc. (NASDAQ:NCNO), Assurant, Inc. (NYSE:AIZ), MyoKardia, Inc. (NASDAQ:MYOK), SYNNEX Corporation (NYSE:SNX), Ascendis Pharma A/S (NASDAQ:ASND), and The New York Times Company (NYSE:NYT). All of these stocks’ market caps are similar to COLD’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 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $1200 million. That figure was $274 million in COLD’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Assurant, Inc. (NYSE:AIZ) is the least popular one with only 23 bullish hedge fund positions. Americold Realty Trust (NYSE:COLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for COLD is 50.9. 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 negative signal and 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 33.3% in 2020 through December 18th and surpassed the market again by 16.4 percentage points. Unfortunately COLD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); COLD investors were disappointed as the stock returned 0.5% since the end of September (through 12/18) 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.