Do Hedge Funds Love Stericycle Inc (SRCL)?

·6 min read

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article, we look at what those funds think of Stericycle Inc (NASDAQ:SRCL) based on that data.

Stericycle Inc (NASDAQ:SRCL) has seen an increase in enthusiasm from smart money of late. Stericycle Inc (NASDAQ:SRCL) was in 26 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that SRCL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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Tom Gayner
Tom Gayner

Tom Gayner of Markel Gayner Asset Management

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 review the latest hedge fund action surrounding Stericycle Inc (NASDAQ:SRCL).

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

At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in SRCL a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, Ariel Investments was the largest shareholder of Stericycle Inc (NASDAQ:SRCL), with a stake worth $270.7 million reported as of the end of June. Trailing Ariel Investments was Southpoint Capital Advisors, which amassed a stake valued at $133.8 million. Impax Asset Management, Diamond Hill Capital, and Markel Gayner Asset Management 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 Silver Heights Capital Management allocated the biggest weight to Stericycle Inc (NASDAQ:SRCL), around 13.41% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, setting aside 2.55 percent of its 13F equity portfolio to SRCL.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Impax Asset Management, managed by Ian Simm, assembled the most valuable position in Stericycle Inc (NASDAQ:SRCL). Impax Asset Management had $87 million invested in the company at the end of the quarter. Jack Woodruff's Candlestick Capital Management also initiated a $7.9 million position during the quarter. The following funds were also among the new SRCL investors: Dmitry Balyasny's Balyasny Asset Management, David Harding's Winton Capital Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Stericycle Inc (NASDAQ:SRCL) but similarly valued. We will take a look at Omnicell, Inc. (NASDAQ:OMCL), TopBuild Corp (NYSE:BLD), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), Columbia Sportswear Company (NASDAQ:COLM), KT Corporation (NYSE:KT), Fox Factory Holding Corp (NASDAQ:FOXF), and BJ's Wholesale Club Holdings, Inc. (NYSE:BJ). This group of stocks' market valuations match SRCL's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OMCL,18,99734,-1 BLD,22,233152,4 RBA,22,378831,3 COLM,29,243951,8 KT,14,181363,2 FOXF,14,99033,0 BJ,17,103834,3 Average,19.4,191414,2.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $703 million in SRCL's case. Columbia Sportswear Company (NASDAQ:COLM) is the most popular stock in this table. On the other hand KT Corporation (NYSE:KT) is the least popular one with only 14 bullish hedge fund positions. Stericycle Inc (NASDAQ:SRCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SRCL is 69.9. 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 positive signal but 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately SRCL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on SRCL were disappointed as the stock returned -4.7% since the end of June (through 10/15) 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 many of these stocks already outperformed the market since 2019.

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

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