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Did Hedge Funds Make The Right Call On PJT Partners Inc (PJT) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtPJT Partners Inc (NYSE:PJT) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is PJT Partners Inc (NYSE:PJT) a bargain? Investors who are in the know were turning bullish. The number of bullish hedge fund bets moved up by 2 recently. Our calculations also showed that PJT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). PJT was in 22 hedge funds’ portfolios at the end of March. There were 20 hedge funds in our database with PJT positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most stock holders, hedge funds are seen as worthless, outdated investment tools of the past. While there are greater than 8000 funds in operation today, Our experts look at the crème de la crème of this club, about 850 funds. It is estimated that this group of investors control the majority of all hedge funds’ total capital, and by tailing their finest stock picks, Insider Monkey has come up with numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Mark Rachesky MHR

Mark Rachesky of MHR Fund Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we’re going to analyze the key hedge fund action encompassing PJT Partners Inc (NYSE:PJT).

What have hedge funds been doing with PJT Partners Inc (NYSE:PJT)?

Heading into the second quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in PJT a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in PJT Partners Inc (NYSE:PJT) was held by MHR Fund Management, which reported holding $38.2 million worth of stock at the end of September. It was followed by Tudor Investment Corp with a $6.5 million position. Other investors bullish on the company included Citadel Investment Group, GAMCO Investors, and Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Corsair Capital LLC allocated the biggest weight to PJT Partners Inc (NYSE:PJT), around 100% of its 13F portfolio. MHR Fund Management is also relatively very bullish on the stock, setting aside 5.8 percent of its 13F equity portfolio to PJT.

As one would reasonably expect, specific money managers were breaking ground themselves. Hudson Bay Capital Management, managed by Sander Gerber, established the most outsized position in PJT Partners Inc (NYSE:PJT). Hudson Bay Capital Management had $4.3 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $2.5 million position during the quarter. The following funds were also among the new PJT investors: Parvinder Thiara’s Athanor Capital and Greg Eisner’s Engineers Gate Manager.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PJT Partners Inc (NYSE:PJT) but similarly valued. We will take a look at Helmerich & Payne, Inc. (NYSE:HP), Hancock Whitney Corporation (NASDAQ:HWC), Atlantic Union Bankshares Corporation (NASDAQ:AUB), and Cimarex Energy Co (NYSE:XEC). This group of stocks’ market values match PJT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HP 27 114660 -6
HWC 20 40474 4
AUB 10 14509 2
XEC 35 398770 2
Average 23 142103 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $88 million in PJT’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Atlantic Union Bankshares Corporation (NASDAQ:AUB) is the least popular one with only 10 bullish hedge fund positions. PJT Partners Inc (NYSE:PJT) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately PJT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PJT investors were disappointed as the stock returned 18.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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