Is CWST A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Casella Waste Systems Inc. (NASDAQ:CWST).

Is CWST a good stock to buy now? Casella Waste Systems Inc. (NASDAQ:CWST) has seen an increase in hedge fund sentiment of late. Casella Waste Systems Inc. (NASDAQ:CWST) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. Our calculations also showed that CWST 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

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 we’re going to take a gander at the latest hedge fund action regarding Casella Waste Systems Inc. (NASDAQ:CWST).

Do Hedge Funds Think CWST Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CWST over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Casella Waste Systems Inc. (NASDAQ:CWST) was held by Renaissance Technologies, which reported holding $93 million worth of stock at the end of September. It was followed by GAMCO Investors with a $9.3 million position. Other investors bullish on the company included SG Capital Management, Portolan Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position SG Capital Management allocated the biggest weight to Casella Waste Systems Inc. (NASDAQ:CWST), around 2.55% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, setting aside 0.67 percent of its 13F equity portfolio to CWST.

As industrywide interest jumped, some big names were breaking ground themselves. SG Capital Management, managed by Ken Grossman and Glen Schneider, created the largest position in Casella Waste Systems Inc. (NASDAQ:CWST). SG Capital Management had $8.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $5.8 million investment in the stock during the quarter. The only other fund with a brand new CWST position is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Casella Waste Systems Inc. (NASDAQ:CWST) but similarly valued. We will take a look at Green Dot Corporation (NYSE:GDOT), Papa John’s International, Inc. (NASDAQ:PZZA), Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), Innovative Industrial Properties, Inc. (NYSE:IIPR), National Health Investors Inc (NYSE:NHI), Coherent, Inc. (NASDAQ:COHR), and Hecla Mining Company (NYSE:HL). This group of stocks’ market valuations match CWST’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GDOT 28 539024 5
PZZA 38 392909 4
PNFP 22 48850 8
IIPR 20 235842 0
NHI 12 54916 -3
COHR 29 163652 -3
HL 17 43194 4
Average 23.7 211198 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $146 million in CWST’s case. Papa John’s International, Inc. (NASDAQ:PZZA) is the most popular stock in this table. On the other hand National Health Investors Inc (NYSE:NHI) is the least popular one with only 12 bullish hedge fund positions. Casella Waste Systems Inc. (NASDAQ:CWST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CWST is 42.5. 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 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately CWST wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CWST investors were disappointed as the stock returned 6.9% 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 most of these stocks already outperformed the market in 2020.

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