We can judge whether Patterson Companies, Inc. (NASDAQ:PDCO) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.
Patterson Companies, Inc. (NASDAQ:PDCO) was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. PDCO investors should pay attention to a decrease in support from the world’s most successful money managers recently. There were 22 hedge funds in our database with PDCO positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Phillips 66 Partners LP (NYSE:PSXP), United Therapeutics Corporation (NASDAQ:UTHR), and Braskem SA (ADR) (NYSE:BAK) to gather more data points.
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How are hedge funds trading Patterson Companies, Inc. (NASDAQ:PDCO)?
Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a fall of 14% from the second quarter of 2016. By comparison, 18 hedge funds held shares or bullish call options in PDCO heading into this year. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, GAMCO Investors, led by Mario Gabelli, holds the largest position in Patterson Companies, Inc. (NASDAQ:PDCO). GAMCO Investors has a $67.1 million position in the stock. The second most bullish fund manager is James Dondero of Highland Capital Management, with a $26.9 million position. Some other hedge funds and institutional investors that hold long positions comprise Justin John Ferayorni’s Tamarack Capital Management, John D. Gillespie’s Prospector Partners and Greg Poole’s Echo Street Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that sold off their entire stakes in the stock during the third quarter. Interestingly, Israel Englander’s Millennium Management sold off the biggest investment of all the hedgies followed by Insider Monkey, totaling an estimated $22.8 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also dumped its stock, about $6 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to Patterson Companies, Inc. (NASDAQ:PDCO). We will take a look at Phillips 66 Partners LP (NYSE:PSXP), United Therapeutics Corporation (NASDAQ:UTHR), Braskem SA (ADR) (NYSE:BAK), and NRG Energy Inc (NYSE:NRG). This group of stocks’ market caps are closest to PDCO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $421 million. That figure was $187 million in PDCO’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 8 bullish hedge fund positions. Patterson Companies, Inc. (NASDAQ:PDCO) 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 UTHR might be a better candidate to consider taking a long position in.