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Is Core Laboratories N.V. (CLB) Going to Burn These Hedge Funds?

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about Core Laboratories N.V. (NYSE:CLB).

Core Laboratories N.V. (NYSE:CLB) was in 14 hedge funds’ portfolios at the end of September. CLB has seen a decrease in hedge fund interest in recent months. There were 17 hedge funds in our database with CLB holdings at the end of the previous quarter. Our calculations also showed that clb isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Izzy Englander of MILLENNIUM MANAGEMENT

We’re going to take a gander at the recent hedge fund action surrounding Core Laboratories N.V. (NYSE:CLB).

How are hedge funds trading Core Laboratories N.V. (NYSE:CLB)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CLB over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CLB Positions

Among these funds, Fisher Asset Management held the most valuable stake in Core Laboratories N.V. (NYSE:CLB), which was worth $83.6 million at the end of the third quarter. On the second spot was Ariel Investments which amassed $58 million worth of shares. Moreover, Select Equity Group, Millennium Management, and Renaissance Technologies were also bullish on Core Laboratories N.V. (NYSE:CLB), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Core Laboratories N.V. (NYSE:CLB) has faced bearish sentiment from the smart money, logic holds that there is a sect of funds that decided to sell off their entire stakes in the third quarter. Intriguingly, Richard Driehaus’s Driehaus Capital dumped the largest investment of the 700 funds watched by Insider Monkey, worth an estimated $30.8 million in stock. Till Bechtolsheimer’s fund, Arosa Capital Management, also sold off its stock, about $13.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Core Laboratories N.V. (NYSE:CLB) but similarly valued. These stocks are FibroGen Inc (NASDAQ:FGEN), Lions Gate Entertainment Corporation (NYSE:LGF-B), Euronet Worldwide, Inc. (NASDAQ:EEFT), and EPR Properties (NYSE:EPR). This group of stocks’ market valuations match CLB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FGEN 17 467970 0
LGF-B 14 478134 -1
EEFT 24 213065 6
EPR 13 56577 1
Average 17 303937 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $304 million. That figure was $247 million in CLB’s case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand EPR Properties (NYSE:EPR) is the least popular one with only 13 bullish hedge fund positions. Core Laboratories N.V. (NYSE:CLB) 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 EEFT might be a better candidate to consider a long position.

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

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