Is CRH PLC (NYSE:CRH) a good stock to buy? CRH PLC (NYSE:CRH) investors should pay attention to a decrease in hedge fund interest lately. CRH was in 5 hedge funds’ portfolios at the end of the first quarter of 2019. There were 8 hedge funds in our database with CRH holdings at the end of the previous quarter. Our calculations also showed that CRH isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a look at the key hedge fund action surrounding CRH PLC (NYSE:CRH).
How are hedge funds trading CRH PLC (NYSE:CRH)?
At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the fourth quarter of 2018. On the other hand, there were a total of 5 hedge funds with a bullish position in CRH a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in CRH PLC (NYSE:CRH), which was worth $39 million at the end of the first quarter. On the second spot was GMT Capital which amassed $14 million worth of shares. Moreover, Point72 Asset Management, Citadel Investment Group, and Millennium Management were also bullish on CRH PLC (NYSE:CRH), allocating a large percentage of their portfolios to this stock.
Judging by the fact that CRH PLC (NYSE:CRH) has faced a decline in interest from the smart money, it’s safe to say that there was a specific group of money managers who sold off their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of the “upper crust” of funds followed by Insider Monkey, totaling close to $3.9 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dumped about $1.8 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to CRH PLC (NYSE:CRH). These stocks are Dollar Tree, Inc. (NASDAQ:DLTR), Brown-Forman Corporation (NYSE:BF), Wisconsin Energy Group, Inc. (NYSE:WEC), and State Street Corporation (NYSE:STT). All of these stocks’ market caps match CRH’s market cap.
[table]
Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position
DLTR,48,2546741,-5
BF,24,646634,3
WEC,15,437674,2
STT,32,719914,0
Average,29.75,1087741,0
[/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $1088 million. That figure was $61 million in CRH’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand Wisconsin Energy Group, Inc. (NYSE:WEC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks CRH PLC (NYSE:CRH) is even less popular than WEC. Hedge funds dodged a bullet by taking a bearish stance towards CRH. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CRH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CRH investors were disappointed as the stock returned 3.3% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
