As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Crane Co. (NYSE:CR).
Crane Co. (NYSE:CR) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. CR investors should pay attention to an increase in enthusiasm from smart money of late. There were 17 hedge funds in our database with CR positions at the end of the first quarter. Our calculations also showed that CR isn't among the 30 most popular stocks among hedge funds (click for Q2 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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
John Overdeck of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover 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 EV 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 we're going to go over the latest hedge fund action surrounding Crane Co. (NYSE:CR).
Do Hedge Funds Think CR Is A Good Stock To Buy Now?
At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 47% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in CR over the last 24 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Crane Co. (NYSE:CR) was held by GAMCO Investors, which reported holding $140.3 million worth of stock at the end of June. It was followed by Royce & Associates with a $31.1 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and AQR Capital Management. In terms of the portfolio weights assigned to each position Value Holdings LP allocated the biggest weight to Crane Co. (NYSE:CR), around 1.45% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 1.19 percent of its 13F equity portfolio to CR.
Now, specific money managers have been driving this bullishness. Renaissance Technologies, assembled the most outsized position in Crane Co. (NYSE:CR). Renaissance Technologies had $6.9 million invested in the company at the end of the quarter. Ira Unschuld's Brant Point Investment Management also initiated a $6.2 million position during the quarter. The other funds with new positions in the stock are Sander Gerber's Hudson Bay Capital Management, Dmitry Balyasny's Balyasny Asset Management, and Mark Coe's Intrinsic Edge Capital.
Let's check out 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 KBR, Inc. (NYSE:KBR), Ballard Power Systems Inc. (NASDAQ:BLDP), Qurate Retail, Inc. (NASDAQ:QRTEA), Coursera, Inc. (NYSE:COUR), The Howard Hughes Corporation (NYSE:HHC), Medallia, Inc. (NYSE:MDLA), and HollyFrontier Corporation (NYSE:HFC). This group of stocks' market valuations are similar to CR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KBR,36,1046690,5 BLDP,15,131568,-3 QRTEA,39,889708,8 COUR,11,52007,-14 HHC,25,1669885,-2 MDLA,23,364169,4 HFC,30,319391,10 Average,25.6,639060,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $304 million in CR's case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand Coursera, Inc. (NYSE:COUR) is the least popular one with only 11 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 60.9. 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 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 2.5% since the end of June (through 10/22) 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.