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Should I Avoid C.H. Robinson Worldwide, Inc. (CHRW)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistics is 32. CHRW investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 32 hedge funds in our database with CHRW holdings at the end of March. Our calculations also showed that CHRW isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

To most shareholders, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are more than 8000 funds trading at present, Our experts hone in on the leaders of this club, approximately 850 funds. Most estimates calculate that this group of people manage most of the smart money’s total capital, and by tailing their highest performing investments, Insider Monkey has identified several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

James Dondero Highland Capital Management

James Dondero of Highland Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the new hedge fund action encompassing C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).

Hedge fund activity in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)

At second quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHRW over the last 20 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Is CHRW A Good Stock To Buy?

Among these funds, AQR Capital Management held the most valuable stake in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), which was worth $113.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $113.1 million worth of shares. D E Shaw, Citadel Investment Group, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Element Capital Management allocated the biggest weight to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), around 1.07% of its 13F portfolio. Highland Capital Management is also relatively very bullish on the stock, designating 0.53 percent of its 13F equity portfolio to CHRW.

Due to the fact that C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) has witnessed a decline in interest from hedge fund managers, we can see that there exists a select few hedge funds that elected to cut their full holdings last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, valued at about $6.6 million in stock. David Costen Haley’s fund, HBK Investments, also said goodbye to its stock, about $2.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 4 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) but similarly valued. We will take a look at Monolithic Power Systems, Inc. (NASDAQ:MPWR), argenx SE (NASDAQ:ARGX), Molina Healthcare, Inc. (NYSE:MOH), Royal Caribbean Cruises Ltd. (NYSE:RCL), Avalara, Inc. (NYSE:AVLR), CBOE Global Markets Inc (NASDAQ:CBOE), and Huazhu Group Limited (NASDAQ:HTHT). This group of stocks’ market valuations are similar to CHRW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MPWR 36 555595 13
ARGX 29 1157644 4
MOH 34 1316051 2
RCL 31 381178 6
AVLR 37 1446149 3
CBOE 32 840386 -6
HTHT 17 381209 0
Average 30.9 868316 3.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $868 million. That figure was $442 million in CHRW’s case. Avalara, Inc. (NYSE:AVLR) is the most popular stock in this table. On the other hand Huazhu Group Limited (NASDAQ:HTHT) is the least popular one with only 17 bullish hedge fund positions. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CHRW is 54.8. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. A small number of hedge funds were also right about betting on CHRW as the stock returned 30.1% since the end of June (through September 25th) and outperformed the market by an even larger margin.

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