Was The Smart Money Right About Piling Into Carrier Global (CARR)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Carrier Global Corporation (NYSE:CARR).

Carrier Global Corporation (NYSE:CARR) was in 52 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 49. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CARR has seen an increase in activity from the world’s largest hedge funds recently. There were 49 hedge funds in our database with CARR positions at the end of the third quarter. Our calculations also showed that CARR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

To most market participants, hedge funds are seen as unimportant, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open today, Our researchers choose to focus on the bigwigs of this club, approximately 850 funds. These hedge fund managers oversee most of the hedge fund industry’s total asset base, and by paying attention to their best stock picks, Insider Monkey has figured out a few investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Jeffrey Gates of Gates Capital

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

At the end of December, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in CARR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Among these funds, Southpoint Capital Advisors held the most valuable stake in Carrier Global Corporation (NYSE:CARR), which was worth $452.6 million at the end of the fourth quarter. On the second spot was Theleme Partners which amassed $210.9 million worth of shares. Diamond Hill Capital, Gates Capital Management, and Laurion Capital 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 Southpoint Capital Advisors allocated the biggest weight to Carrier Global Corporation (NYSE:CARR), around 7.89% of its 13F portfolio. Theleme Partners is also relatively very bullish on the stock, earmarking 6.92 percent of its 13F equity portfolio to CARR.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Electron Capital Partners, managed by Jos Shaver, assembled the largest position in Carrier Global Corporation (NYSE:CARR). Electron Capital Partners had $34.4 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $8.5 million position during the quarter. The other funds with new positions in the stock are Mark R. Freeman’s Socorro Asset Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Qing Li’s Sciencast Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Carrier Global Corporation (NYSE:CARR) but similarly valued. We will take a look at American International Group Inc (NYSE:AIG), Banco Santander (Brasil) SA (NYSE:BSBR), Mizuho Financial Group Inc. (NYSE:MFG), Alcon Inc. (NYSE:ALC), Tencent Music Entertainment Group (NYSE:TME), Wipro Limited (NYSE:WIT), and Zimmer Biomet Holdings Inc (NYSE:ZBH). This group of stocks’ market valuations match CARR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AIG 41 2081359 3
BSBR 6 6844 1
MFG 5 14769 0
ALC 24 653511 -2
TME 26 826299 2
WIT 11 129140 2
ZBH 53 1607008 -2
Average 23.7 759847 0.6

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 $760 million. That figure was $2285 million in CARR’s case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 5 bullish hedge fund positions. Carrier Global Corporation (NYSE:CARR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CARR is 87. 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 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on CARR as the stock returned 15.9% since the end of Q4 (through 4/30) 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.