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Did Hedge Funds Drop The Ball On Performance Food Group Company (PFGC) ?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Performance Food Group Company (NYSE:PFGC) in this article.

Is Performance Food Group Company (NYSE:PFGC) the right investment to pursue these days? The smart money is getting less optimistic. The number of long hedge fund bets were cut by 5 in recent months. Our calculations also showed that pfgc isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Izzy Englander of MILLENNIUM MANAGEMENT

We’re going to take a peek at the latest hedge fund action regarding Performance Food Group Company (NYSE:PFGC).

How have hedgies been trading Performance Food Group Company (NYSE:PFGC)?

At Q4’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards PFGC over the last 14 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds With PFGC Positions

According to Insider Monkey’s hedge fund database, GLG Partners, managed by Noam Gottesman, holds the largest position in Performance Food Group Company (NYSE:PFGC). GLG Partners has a $24 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $22.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions comprise Jim Simons’s Renaissance Technologies, John Overdeck and David Siegel’s Two Sigma Advisors and Gregg Moskowitz’s Interval Partners.

Since Performance Food Group Company (NYSE:PFGC) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that decided to sell off their positions entirely in the third quarter. Interestingly, Alexander Mitchell’s Scopus Asset Management said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $20.6 million in stock. Leon Shaulov’s fund, Maplelane Capital, also cut its stock, about $4.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Performance Food Group Company (NYSE:PFGC). These stocks are argenx SE (NASDAQ:ARGX), Zynga Inc (NASDAQ:ZNGA), EnerSys (NYSE:ENS), and Olin Corporation (NYSE:OLN). This group of stocks’ market values are closest to PFGC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARGX 27 709744 -7
ZNGA 29 725450 3
ENS 22 132184 4
OLN 33 638129 6
Average 27.75 551377 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $551 million. That figure was $159 million in PFGC’s case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand EnerSys (NYSE:ENS) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Performance Food Group Company (NYSE:PFGC) is even less popular than ENS. Hedge funds clearly dropped the ball on PFGC as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on PFGC as the stock returned 25.6% and outperformed the market by an even larger margin.

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

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