What Do Hedge Funds Think of Core Laboratories N.V. (CLB)?

Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.

Is Core Laboratories N.V. (NYSE:CLB) a buy, sell, or hold? The smart money is becoming less hopeful. The number of long hedge fund positions retreated by 7 in recent months. CLB was in 21 hedge funds’ portfolios at the end of September. There were 28 hedge funds in our database with CLB holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Commerce Bancshares, Inc. (NASDAQ:CBSH), Brookdale Senior Living, Inc. (NYSE:BKD), and Ingram Micro Inc. (NYSE:IM) to gather more data points.

Keeping this in mind, let’s go over the fresh action regarding Core Laboratories N.V. (NYSE:CLB).

What have hedge funds been doing with Core Laboratories N.V. (NYSE:CLB)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Wallace Weitz’s Wallace R. Weitz & Co. has the number one position in Core Laboratories N.V. (NYSE:CLB), worth close to $22.9 million, corresponding to 0.7% of its total 13F portfolio. On Wallace R. Weitz & Co.’s heels is Craig C. Albert of Sheffield Asset Management, with a $20.9 million position; 3.1% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism contain Tom Gayner’s Markel Gayner Asset Management, Jim Simons’ Renaissance Technologies and Constantinos J. Christofilis’s Archon Capital Management.

Judging by the fact that Core Laboratories N.V. (NYSE:CLB) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of hedge funds that slashed their full holdings last quarter. Interestingly, Jorge Paulo Lemann’s 3G Capital sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising about $11.4 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $10.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 7 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Core Laboratories N.V. (NYSE:CLB). We will take a look at Commerce Bancshares, Inc. (NASDAQ:CBSH), Brookdale Senior Living, Inc. (NYSE:BKD), Ingram Micro Inc. (NYSE:IM), and First American Financial Corp (NYSE:FAF). All of these stocks’ market caps match CLB’s market cap.

As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $834 million. That figure was $135 million in CLB’s case. Brookdale Senior Living, Inc. (NYSE:BKD) is the most popular stock in this table. On the other hand Commerce Bancshares, Inc. (NASDAQ:CBSH) is the least popular one with only 10 bullish hedge fund positions. Core Laboratories N.V. (NYSE:CLB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BKD might be a better candidate to consider a long position.