Is Crane Co. (CR) A Good Stock To Buy?

Is Crane Co. (NYSE:CR) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Hedge fund interest in Crane Co. (NYSE:CR) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Foot Locker, Inc. (NYSE:FL), HubSpot Inc (NYSE:HUBS), and CIT Group Inc. (NYSE:CIT) to gather more data points.

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.

Mario Gabelli

Let’s check out the key hedge fund action surrounding Crane Co. (NYSE:CR).

What does the smart money think about Crane Co. (NYSE:CR)?

Heading into the fourth quarter of 2018, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, no change from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in CR at the beginning of this year. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

No of Hedge Funds with CR Positions

Among these funds, GAMCO Investors held the most valuable stake in Crane Co. (NYSE:CR), which was worth $220.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $75.5 million worth of shares. Moreover, Gardner Russo & Gardner, Two Sigma Advisors, and GLG Partners were also bullish on Crane Co. (NYSE:CR), allocating a large percentage of their portfolios to this stock.

Seeing as Crane Co. (NYSE:CR) has witnessed declining sentiment from the smart money, it’s safe to say that there exists a select few hedge funds who sold off their full holdings last quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $7.6 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $2.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Crane Co. (NYSE:CR). These stocks are Foot Locker, Inc. (NYSE:FL), HubSpot Inc (NYSE:HUBS), CIT Group Inc. (NYSE:CIT), and Brunswick Corporation (NYSE:BC). This group of stocks’ market caps match CR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FL 26 465132 -4
HUBS 21 440876 -1
CIT 25 899403 -1
BC 34 794302 4
Average 26.5 649928 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $650 million. That figure was $349 million in CR’s case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand HubSpot Inc (NYSE:HUBS) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Crane Co. (NYSE:CR) is even less popular than HUBS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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