How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding PriceSmart, Inc. (NASDAQ:PSMT).
PriceSmart, Inc. (NASDAQ:PSMT) was in 12 hedge funds’ portfolios at the end of September. PriceSmart, Inc. shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 9 hedge funds in our database with PriceSmart, Inc. 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 The Timken Company (NYSE:TKR), Domtar Corp (USA) (NYSE:UFS), and Covanta Holding Corporation (NYSE:CVA) to gather more data points.
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Today there are many metrics investors use to assess their holdings. A couple of the most useful metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a significant amount (see the details here).
With all of this in mind, we’re going to take a look at the key action regarding PriceSmart, Inc. (NASDAQ:PSMT).
How have hedgies been trading PriceSmart, Inc. (NASDAQ:PSMT)?
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a 33% jump from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Gotham Asset Management, managed by Joel Greenblatt, holds the most valuable position in PriceSmart, Inc. (NASDAQ:PSMT). Gotham Asset Management has a $9.7 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Renaissance Technologies, holding a $9.7 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism contain Steve Cohen’s Point72 Asset Management, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.
With general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Gotham Asset Management assembled the most valuable position in PriceSmart, Inc. (NASDAQ:PSMT). Renaissance Technologies also initiated a position during the quarter. The following funds were also among the new PriceSmart, Inc. investors: Millennium Management, Glenn Russell Dubin’s Highbridge Capital Management, and Peter Muller’s PDT Partners.
Let’s check out hedge fund activity in other stocks similar to PriceSmart, Inc. (NASDAQ:PSMT). These stocks are The Timken Company (NYSE:TKR), Domtar Corp (USA) (NYSE:UFS), Covanta Holding Corporation (NYSE:CVA), and First Industrial Realty Trust, Inc. (NYSE:FR). This group of stocks’ market valuations resemble PriceSmart, Inc.’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TKR | 20 | 274701 | -4 |
| UFS | 20 | 111838 | 2 |
| CVA | 19 | 364515 | 0 |
| FR | 16 | 249996 | 1 |
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $250 million. That figure was $48 million in PriceSmart, Inc.’s case. The Timken Company (NYSE:TKR) is the most popular stock in this table. On the other hand First Industrial Realty Trust, Inc. (NYSE:FR) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks PriceSmart, Inc. (NASDAQ:PSMT) is even less popular than First Industrial. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock, though interest is starting to grow.
