Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Par Pacific Holdings, Inc. (NYSE:PARR) was in 17 hedge funds’ portfolios at the end of September. PARR shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 21 hedge funds in our database with PARR holdings at the end of the previous quarter. Our calculations also showed that PARR isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to review the new hedge fund action surrounding Par Pacific Holdings, Inc. (NYSE:PARR).
What does the smart money think about Par Pacific Holdings, Inc. (NYSE:PARR)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PARR over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Whitebox Advisors, managed by Andy Redleaf, holds the most valuable position in Par Pacific Holdings, Inc. (NYSE:PARR). Whitebox Advisors has a $64.4 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Park West Asset Management, managed by Peter S. Park, which holds a $34.1 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other professional money managers that are bullish encompass Jim Simons’s Renaissance Technologies, Daniel Beltzman and Gergory Smith’s Birch Run Capital and Miguel Fidalgo’s Triarii Capital.
Since Par Pacific Holdings, Inc. (NYSE:PARR) has faced falling interest from hedge fund managers, it’s safe to say that there is a sect of hedgies who were dropping their positions entirely by the end of the third quarter. Interestingly, Michael Barnes and Arif Inayatullah’s Tricadia Capital Management sold off the largest investment of all the hedgies watched by Insider Monkey, valued at an estimated $8.5 million in stock. Peter Schliemann’s fund, Rutabaga Capital Management, also said goodbye to its stock, about $7.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Par Pacific Holdings, Inc. (NYSE:PARR). These stocks are Tuniu Corporation (NASDAQ:TOUR), Johnson Outdoors Inc. (NASDAQ:JOUT), Acorda Therapeutics Inc (NASDAQ:ACOR), and Denny’s Corporation (NASDAQ:DENN). This group of stocks’ market caps resemble PARR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $144 million in PARR’s case. Denny’s Corporation (NASDAQ:DENN) is the most popular stock in this table. On the other hand Tuniu Corporation (NASDAQ:TOUR) is the least popular one with only 3 bullish hedge fund positions. Par Pacific Holdings, Inc. (NYSE:PARR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DENN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.