Along with its affiliated funds, Glenn J. Krevlin‘s Glenhill Advisors has cut its stake in Pep Boys-Manny Moe and Jack (NYSE:PBY) by about 398,000 shares to 3.35 million shares, according to a recent SEC filing. The current holding represents 6.2% of the company’s outstanding common stock and comprises about 2.80 million shares with sole voting and dispositive power and 553,100 shares with shared voting and dispositive power.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Glenn launched his New York-based hedge fund in 2001 after being a General Partner at Cumberland Associates LLC for six years. Prior to that he had worked at Goldman Sachs for eight years. Glenhill employs a long/short strategy to primarily invest in smaller-cap companies. Currently, the fund has about $2.38 billion worth of assets under management and the market value of its public equity portfolio stood at $1.27 billion at the end of March, with the largest equity holdings being Sinclair Broadcast Group Inc (NASDAQ:SBGI), and Air Products & Chemicals, Inc. (NYSE:APD). The consumer discretionary sector represented 36% of the fund’s portfolio value.
The current slashing of Glenhill’s stake in Pep Boys-Manny Moe and Jack (NYSE:PBY) comes on the heels of a relatively small addition of 13,800 shares by the fund last month. Glenhill has also changed the nature of its holding from activist to passive, most probably owing to ongoing activism from Mario Gabelli‘s GAMCO Investors, which holds about 10.17 million shares of Pep Boys-Manny Moe and Jack (NYSE:PBY) representing almost 19% of the company’s outstanding shares. In April, GAMCO announced that it was planning to nominate five candidates for the $629.76 million auto-supplies and services retailer’s board. The list included former Bear Stearns executive Bruce Lisman, Philip T. Blazek, F. Jack Liebau Jr., Matthew Goldfarb and Glenn J. Angiolillo. In order to avoid a proxy fight at its annual meeting in July, the company has agreed to add three new independent directors to its board. Moreover, Pep Boys-Manny Moe and Jack (NYSE:PBY) also recently named Scott Sider, the group President of Hertz’s Americas division, as its new CEO. Low tire prices hit the company hard last year and it went through a transition phase in the fourth quarter. So far this year, Pep Boys-Manny Moe and Jack (NYSE:PBY)’s stock has accelerated by 19.55%. Steven Boyd’s Armistice Capital has the third-largest stake in the company among the investors we track, following GAMCO and Glenhill.