In this article we will check out the progression of hedge fund sentiment towards PACCAR Inc (NASDAQ:PCAR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is PACCAR Inc (NASDAQ:PCAR) a sound investment now? Money managers were becoming less hopeful. The number of long hedge fund positions went down by 6 recently. PACCAR Inc (NASDAQ:PCAR) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. Our calculations also showed that PCAR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Do Hedge Funds Think PCAR Is A Good Stock To Buy Now?
At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in PCAR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, ARK Investment Management held the most valuable stake in PACCAR Inc (NASDAQ:PCAR), which was worth $293.4 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $109.8 million worth of shares. Millennium Management, Adage Capital Management, and Citadel Investment Group 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 AlphaCrest Capital Management allocated the biggest weight to PACCAR Inc (NASDAQ:PCAR), around 0.62% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, dishing out 0.61 percent of its 13F equity portfolio to PCAR.
Because PACCAR Inc (NASDAQ:PCAR) has experienced bearish sentiment from the smart money, we can see that there was a specific group of funds who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management dumped the largest stake of all the hedgies tracked by Insider Monkey, worth close to $4.7 million in stock. Ray Dalio’s fund, Bridgewater Associates, also dropped its stock, about $3.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks similar to PACCAR Inc (NASDAQ:PCAR). These stocks are TransDigm Group Incorporated (NYSE:TDG), Brown-Forman Corporation (NYSE:BF), Suncor Energy Inc. (NYSE:SU), BeiGene, Ltd. (NASDAQ:BGNE), Archer Daniels Midland Company (NYSE:ADM), Motorola Solutions Inc (NYSE:MSI), and Republic Services, Inc. (NYSE:RSG). This group of stocks’ market valuations are closest to PCAR’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $2547 million. That figure was $626 million in PCAR’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 19 bullish hedge fund positions. PACCAR Inc (NASDAQ:PCAR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PCAR is 31.6. 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 negative signal and 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately PCAR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PCAR investors were disappointed as the stock returned -5.5% since the end of March (through 7/9) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.