Do Hedge Funds Love Cintas Corporation (CTAS)?

·5 min read

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Cintas Corporation (NASDAQ:CTAS).

Cintas Corporation (NASDAQ:CTAS) investors should be aware of an increase in hedge fund sentiment in recent months. Cintas Corporation (NASDAQ:CTAS) was in 36 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. There were 21 hedge funds in our database with CTAS positions at the end of the second quarter. Our calculations also showed that CTAS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let's analyze the fresh hedge fund action encompassing Cintas Corporation (NASDAQ:CTAS).

CHILTON INVESTMENT COMPANY
CHILTON INVESTMENT COMPANY

Richard Chilton of Chilton Investment Company

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

Heading into the fourth quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 71% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in CTAS a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

The largest stake in Cintas Corporation (NASDAQ:CTAS) was held by Alkeon Capital Management, which reported holding $153.3 million worth of stock at the end of September. It was followed by Chilton Investment Company with a $134.8 million position. Other investors bullish on the company included Bristol Gate Capital Partners, Impax Asset Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Lunia Capital allocated the biggest weight to Cintas Corporation (NASDAQ:CTAS), around 5.9% of its 13F portfolio. Bristol Gate Capital Partners is also relatively very bullish on the stock, setting aside 4.69 percent of its 13F equity portfolio to CTAS.

As aggregate interest increased, some big names have jumped into Cintas Corporation (NASDAQ:CTAS) headfirst. Impax Asset Management, managed by Ian Simm, established the largest position in Cintas Corporation (NASDAQ:CTAS). Impax Asset Management had $88.5 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $65 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, John Overdeck and David Siegel's Two Sigma Advisors, and D. E. Shaw's D E Shaw.

Let's go over hedge fund activity in other stocks similar to Cintas Corporation (NASDAQ:CTAS). We will take a look at Marathon Petroleum Corp (NYSE:MPC), Alcon Inc. (NYSE:ALC), Motorola Solutions Inc (NYSE:MSI), Cognizant Technology Solutions Corp (NASDAQ:CTSH), Ross Stores, Inc. (NASDAQ:ROST), ResMed Inc. (NYSE:RMD), and Republic Services, Inc. (NYSE:RSG). This group of stocks' market caps are closest to CTAS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MPC,43,2688865,-5 ALC,20,1263277,-2 MSI,34,1266185,-3 CTSH,29,2336693,-12 ROST,41,1220437,-10 RMD,28,396289,2 RSG,31,1222055,-3 Average,32.3,1484829,-4.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $1485 million. That figure was $782 million in CTAS's case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Alcon Inc. (NYSE:ALC) is the least popular one with only 20 bullish hedge fund positions. Cintas Corporation (NASDAQ:CTAS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CTAS is 68.8. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on CTAS as the stock returned 11.2% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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