In this article we will analyze whether Chart Industries, Inc. (NASDAQ:GTLS) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is GTLS a good stock to buy now? Chart Industries, Inc. (NASDAQ:GTLS) investors should be aware of a decrease in hedge fund sentiment in recent months. Chart Industries, Inc. (NASDAQ:GTLS) was in 20 hedge funds’ portfolios at the end of September. The all time high for this statistic is 24. Our calculations also showed that GTLS 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 take a look at the key hedge fund action regarding Chart Industries, Inc. (NASDAQ:GTLS).
Do Hedge Funds Think GTLS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in GTLS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Chart Industries, Inc. (NASDAQ:GTLS) was held by Fisher Asset Management, which reported holding $73.4 million worth of stock at the end of September. It was followed by Deep Basin Capital with a $32 million position. Other investors bullish on the company included Citadel Investment Group, Driehaus Capital, and SIR Capital Management. In terms of the portfolio weights assigned to each position Deep Basin Capital allocated the biggest weight to Chart Industries, Inc. (NASDAQ:GTLS), around 3.92% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 3.21 percent of its 13F equity portfolio to GTLS.
Since Chart Industries, Inc. (NASDAQ:GTLS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds who were dropping their positions entirely in the third quarter. At the top of the heap, Todd J. Kantor’s Encompass Capital Advisors dumped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling about $13.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $4.4 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Chart Industries, Inc. (NASDAQ:GTLS). These stocks are Seres Therapeutics Inc (NASDAQ:MCRB), StepStone Group Inc. (NASDAQ:STEP), Ping Identity Holding Corp. (NYSE:PING), Vaxcyte, Inc. (NASDAQ:PCVX), Vonage Holdings Corp. (NYSE:VG), Home Bancshares Inc (NASDAQ:HOMB), and Brighthouse Financial, Inc. (NASDAQ:BHF). All of these stocks’ market caps are closest to GTLS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $223 million in GTLS’s case. Vonage Holdings Corp. (NYSE:VG) is the most popular stock in this table. On the other hand Vaxcyte, Inc. (NASDAQ:PCVX) is the least popular one with only 10 bullish hedge fund positions. Chart Industries, Inc. (NASDAQ:GTLS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GTLS is 47.2. 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. 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 still beat the market by 15.8 percentage points. Hedge funds were also right about betting on GTLS as the stock returned 62.9% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.