Hedge Funds Are Crazy About Pandora Media Inc (P)

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Pandora Media Inc (NYSE:P) based on those filings.

Is Pandora Media Inc (NYSE:P) undervalued? Money managers are taking an optimistic view. The number of long hedge fund bets rose by 6 recently. At the end of this article, we will also compare Pandora Media Inc (NYSE:P) to other stocks including FMC Corp (NYSE:FMC), Avis Budget Group Inc. (NASDAQ:CAR), and Northstar Realty Finance Corp. (NYSE:NRF) to get a better sense of its popularity.

According to most investors, hedge funds are seen as slow, old financial tools of years past. While there are more than 8000 funds in operation at the moment, our experts choose to focus on the masters of this group, about 700 funds. These hedge fund managers orchestrate the majority of all hedge funds’ total capital, and by observing their best equity investments, Insider Monkey has unsheathed a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, we’re going to analyze the recent action regarding Pandora Media Inc (NYSE:P).

What have hedge funds been doing with Pandora Media Inc (NYSE:P)?

Heading into Q4, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 20% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Eminence Capital, managed by Ricky Sandler, holds the largest position in Pandora Media Inc (NYSE:P). Eminence Capital has a $149.9 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Richard Gerson and Navroz D. Udwadia of Falcon Edge Capital, with a $148.3 million CALL position; 10.3% of its 13F portfolio is allocated to the company. Hedge funds and other institutional investors that hold long positions consist of Seymour Sy Kaufman and Michael Stark’s Crosslink Capital, and D E Shaw.

Now, key hedge funds were leading the bulls’ herd. Clifford Fox’s Columbus Circle Investors initiated a $37.6 million position during the quarter. The following funds were also among the new Pandora Media Inc (NYSE:P) investors: James H. Litinsky’s JHL Capital Group, Josh Resnick’s Jericho Capital Asset Management, and Tiger Management.

Let’s go over hedge fund activity in other stocks similar to Pandora Media Inc (NYSE:P). These stocks are FMC Corp (NYSE:FMC), Avis Budget Group Inc. (NASDAQ:CAR), Northstar Realty Finance Corp. (NYSE:NRF), and Patterson Companies, Inc. (NASDAQ:PDCO). This group of stocks’ market values matches Pandora Media Inc (NYSE:P)’s market value.

As you can see, these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $1.28 billion. That figure was $1.25 billion in Pandora Media Inc (NYSE:P)’s case. Northstar Realty Finance Corp. (NYSE:NRF) is the most popular stock in this table. On the other hand, Patterson Companies, Inc. (NASDAQ:PDCO) is the least popular one with only 28 bullish hedge fund positions. Pandora Media Inc (NYSE:P) 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. In this regard, Northstar Realty Finance Corp. (NYSE:NRF) might be a better candidate to consider a long position.