Was The Smart Money Right About Piling Into Charles River Laboratories (CRL)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Charles River Laboratories International Inc. (NYSE:CRL).

Is Charles River Laboratories International Inc. (NYSE:CRL) a safe investment right now? Money managers were taking a bullish view. The number of long hedge fund bets inched up by 7 recently. Charles River Laboratories International Inc. (NYSE:CRL) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CRL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are several formulas investors employ to size up stocks. Two of the most useful formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outclass the broader indices by a solid amount (see the details here). 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 .

John Rogers’ Top 10 Stock Picks

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the recent hedge fund action regarding Charles River Laboratories International Inc. (NYSE:CRL).

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

At Q4’s end, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the third quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in CRL 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.

Among these funds, Marshall Wace LLP held the most valuable stake in Charles River Laboratories International Inc. (NYSE:CRL), which was worth $213.1 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $108.6 million worth of shares. Ariel Investments, Millennium Management, and Iridian Asset 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 Precept Capital Management allocated the biggest weight to Charles River Laboratories International Inc. (NYSE:CRL), around 9.11% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, dishing out 5.49 percent of its 13F equity portfolio to CRL.

Now, key money managers were breaking ground themselves. Eminence Capital, managed by Ricky Sandler, initiated the most valuable position in Charles River Laboratories International Inc. (NYSE:CRL). Eminence Capital had $17 million invested in the company at the end of the quarter. Michael Rockefeller and Karl Kroeker’s Woodline Partners also made a $6.5 million investment in the stock during the quarter. The other funds with brand new CRL positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Paul Tudor Jones’s Tudor Investment Corp, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Charles River Laboratories International Inc. (NYSE:CRL) but similarly valued. These stocks are ContextLogic Inc. (NASDAQ:WISH), Open Text Corporation (NASDAQ:OTEX), W.P. Carey Inc. (NYSE:WPC), Howmet Aerospace Inc. (NYSE:HWM), Loews Corporation (NYSE:L), Opendoor Technologies Inc. (NASDAQ:OPEN), and Jack Henry & Associates, Inc. (NASDAQ:JKHY). This group of stocks’ market values resemble CRL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WISH 24 348110 23
OTEX 18 234136 -1
WPC 18 197829 -5
HWM 49 4092342 14
L 19 174655 1
OPEN 28 1024602 28
JKHY 28 411775 -2
Average 26.3 926207 8.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $926 million. That figure was $1187 million in CRL’s case. Howmet Aerospace Inc. (NYSE:HWM) is the most popular stock in this table. On the other hand Open Text Corporation (NASDAQ:OTEX) is the least popular one with only 18 bullish hedge fund positions. Charles River Laboratories International Inc. (NYSE:CRL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CRL is 80.3. 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 CRL as the stock returned 33.1% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Charles River Laboratories International Inc. (NYSE:CRL)

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