Hedge Funds Are Crazy About Performance Food Group Company (PFGC)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Performance Food Group Company (NYSE:PFGC) to find out whether there were any major changes in hedge funds’ views.

Is Performance Food Group Company (NYSE:PFGC) worth your attention right now? Investors who are in the know were getting more optimistic. The number of bullish hedge fund bets increased by 23 recently. Performance Food Group Company (NYSE:PFGC) was in 41 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PFGC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the new hedge fund action encompassing Performance Food Group Company (NYSE:PFGC).

Do Hedge Funds Think PFGC Is A Good Stock To Buy Now?

At Q2’s end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 128% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in PFGC a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

More specifically, Citadel Investment Group was the largest shareholder of Performance Food Group Company (NYSE:PFGC), with a stake worth $156.3 million reported as of the end of June. Trailing Citadel Investment Group was Point72 Asset Management, which amassed a stake valued at $82.1 million. Balyasny Asset Management, Millennium Management, and Eminence Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kehrs Ridge Capital allocated the biggest weight to Performance Food Group Company (NYSE:PFGC), around 6.92% of its 13F portfolio. Ayrshire Capital Management is also relatively very bullish on the stock, dishing out 1.48 percent of its 13F equity portfolio to PFGC.

As aggregate interest increased, key money managers have jumped into Performance Food Group Company (NYSE:PFGC) headfirst. Candlestick Capital Management, managed by Jack Woodruff, assembled the biggest position in Performance Food Group Company (NYSE:PFGC). Candlestick Capital Management had $39.4 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also made a $26.5 million investment in the stock during the quarter. The other funds with brand new PFGC positions are Gregg Moskowitz’s Interval Partners, Leon Shaulov’s Maplelane Capital, and Renaissance Technologies.

Let’s check out hedge fund activity in other stocks similar to Performance Food Group Company (NYSE:PFGC). These stocks are MSA Safety Incorporated (NYSE:MSA), Coherent, Inc. (NASDAQ:COHR), Manpowergroup Inc (NYSE:MAN), MicroStrategy Incorporated (NASDAQ:MSTR), United States Steel Corporation (NYSE:X), C3.ai, Inc. (NYSE:AI), and Halozyme Therapeutics, Inc. (NASDAQ:HALO). This group of stocks’ market caps are similar to PFGC’s market cap.

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As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $448 million. That figure was $734 million in PFGC’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand MSA Safety Incorporated (NYSE:MSA) is the least popular one with only 13 bullish hedge fund positions. Performance Food Group Company (NYSE:PFGC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PFGC is 86.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately PFGC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PFGC were disappointed as the stock returned -3.2% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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