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Were Hedge Funds Right About Piling Into Copart, Inc. (CPRT)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Copart, Inc. (NASDAQ:CPRT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Copart, Inc. (NASDAQ:CPRT) a buy, sell, or hold? Hedge funds are in a bullish mood. The number of long hedge fund positions inched up by 6 lately. Our calculations also showed that CPRT isn’t among the 30 most popular stocks among hedge funds (see the video below). CPRT was in 30 hedge funds’ portfolios at the end of June. There were 24 hedge funds in our database with CPRT holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

CPRT_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to analyze the latest hedge fund action encompassing Copart, Inc. (NASDAQ:CPRT).

How have hedgies been trading Copart, Inc. (NASDAQ:CPRT)?

At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CPRT over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Aaron Cowen Suvretta Capital

Among these funds, Suvretta Capital Management held the most valuable stake in Copart, Inc. (NASDAQ:CPRT), which was worth $54 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $33.9 million worth of shares. Moreover, Point72 Asset Management, Echo Street Capital Management, and Winton Capital Management were also bullish on Copart, Inc. (NASDAQ:CPRT), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, specific money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Copart, Inc. (NASDAQ:CPRT). Arrowstreet Capital had $33.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $28.6 million position during the quarter. The following funds were also among the new CPRT investors: Peter Muller’s PDT Partners, Paul Tudor Jones’s Tudor Investment Corp, and John Brandmeyer’s Cognios Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Copart, Inc. (NASDAQ:CPRT) but similarly valued. We will take a look at Fortis Inc. (NYSE:FTS), The Kroger Co. (NYSE:KR), Keysight Technologies Inc (NYSE:KEYS), and Alexandria Real Estate Equities Inc (NYSE:ARE). All of these stocks’ market caps match CPRT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FTS 12 256125 -1
KR 28 404426 6
KEYS 39 855014 2
ARE 27 484902 10
Average 26.5 500117 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $500 million. That figure was $252 million in CPRT’s case. Keysight Technologies Inc (NYSE:KEYS) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 12 bullish hedge fund positions. Copart, Inc. (NASDAQ:CPRT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on CPRT as the stock returned 7.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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