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Should You Buy Chart Industries, Inc. (GTLS)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Chart Industries, Inc. (NASDAQ:GTLS).

Chart Industries, Inc. (NASDAQ:GTLS) was in 18 hedge funds’ portfolios at the end of September. GTLS investors should be aware of an increase in enthusiasm from smart money of late. There were 16 hedge funds in our database with GTLS holdings at the end of the previous quarter. Our calculations also showed that GTLS 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.

Ken Griffin CITADEL INVESTMENT GROUP

We’re going to take a look at the recent hedge fund action regarding Chart Industries, Inc. (NASDAQ:GTLS).

How are hedge funds trading Chart Industries, Inc. (NASDAQ:GTLS)?

Heading into the fourth quarter of 2018, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2018. By comparison, 10 hedge funds held shares or bullish call options in GTLS heading into this year. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

GTLS_dec2018

Of the funds tracked by Insider Monkey, Principal Global Investors’s Columbus Circle Investors has the largest position in Chart Industries, Inc. (NASDAQ:GTLS), worth close to $34.4 million, amounting to 0.7% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $26.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish encompass Anand Parekh’s Alyeska Investment Group, Till Bechtolsheimer’s Arosa Capital Management and Mario Gabelli’s GAMCO Investors.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, initiated the most valuable position in Chart Industries, Inc. (NASDAQ:GTLS). Alyeska Investment Group had $23.8 million invested in the company at the end of the quarter. Louis Navellier’s Navellier & Associates also made a $1 million investment in the stock during the quarter. The following funds were also among the new GTLS investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Jim Simons’s Renaissance Technologies, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s check out hedge fund activity in other stocks similar to Chart Industries, Inc. (NASDAQ:GTLS). We will take a look at DiamondRock Hospitality Company (NYSE:DRH), Federated Investors Inc (NYSE:FII), Piedmont Office Realty Trust, Inc. (NYSE:PDM), and Repligen Corporation (NASDAQ:RGEN). This group of stocks’ market caps are similar to GTLS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DRH 9 90417 -4
FII 15 142997 -4
PDM 10 144868 -1
RGEN 12 52228 3
Average 11.5 107628 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $159 million in GTLS’s case. Federated Investors Inc (NYSE:FII) is the most popular stock in this table. On the other hand DiamondRock Hospitality Company (NYSE:DRH) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Chart Industries, Inc. (NASDAQ:GTLS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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