Were Hedge Funds Right About Dumping Crane Co. (CR)?

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Crane Co. (NYSE:CR) makes for a good investment right now.

Crane Co. (NYSE:CR) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. CR shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 24 hedge funds in our database with CR holdings at the end of December. Our calculations also showed that CR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind let’s review the fresh hedge fund action regarding Crane Co. (NYSE:CR).

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

Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CR over the last 23 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Among these funds, GAMCO Investors held the most valuable stake in Crane Co. (NYSE:CR), which was worth $143.1 million at the end of the fourth quarter. On the second spot was Royce & Associates which amassed $32.8 million worth of shares. Arrowstreet Capital, Two Sigma Advisors, and Interval Partners 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 Value Holdings LP allocated the biggest weight to Crane Co. (NYSE:CR), around 1.43% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 1.26 percent of its 13F equity portfolio to CR.

Due to the fact that Crane Co. (NYSE:CR) has faced falling interest from hedge fund managers, it’s safe to say that there is a sect of fund managers who sold off their positions entirely by the end of the first quarter. Interestingly, Renaissance Technologies sold off the biggest stake of the 750 funds followed by Insider Monkey, totaling close to $3.8 million in stock. Ira Unschuld’s fund, Brant Point Investment Management, also dropped its stock, about $3.5 million worth. These moves are important to note, as total hedge fund interest was cut by 7 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Crane Co. (NYSE:CR) but similarly valued. We will take a look at MAXIMUS, Inc. (NYSE:MMS), Braskem SA (NYSE:BAK), Glacier Bancorp, Inc. (NASDAQ:GBCI), Enstar Group Ltd. (NASDAQ:ESGR), Nikola Corporation (NASDAQ:NKLA), Intellia Therapeutics, Inc. (NASDAQ:NTLA), and Manpowergroup Inc (NYSE:MAN). This group of stocks’ market values match CR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.1 hedge funds with bullish positions and the average amount invested in these stocks was $351 million. That figure was $277 million in CR’s case. Intellia Therapeutics, Inc. (NASDAQ:NTLA) is the most popular stock in this table. On the other hand Braskem SA (NYSE:BAK) is the least popular one with only 8 bullish hedge fund positions. Crane Co. (NYSE:CR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CR is 37. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately CR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CR investors were disappointed as the stock returned -1.2% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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