Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Pyxus International, Inc. (NYSE:PYX).
Is Pyxus International, Inc. (NYSE:PYX) the right pick for your portfolio? The best stock pickers are selling. The number of long hedge fund positions were trimmed by 5 in recent months. Our calculations also showed that PYX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). PYX was in 5 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with PYX positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David E. Shaw of D.E. Shaw
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a gander at the recent hedge fund action regarding Pyxus International, Inc. (NYSE:PYX).
How have hedgies been trading Pyxus International, Inc. (NYSE:PYX)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PYX over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, D E Shaw, managed by David E. Shaw, holds the most valuable position in Pyxus International, Inc. (NYSE:PYX). D E Shaw has a $4.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund is Sculptor Capital, with a $2.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and Franklin Parlamis’s Aequim Alternative Investments. In terms of the portfolio weights assigned to each position Aequim Alternative Investments allocated the biggest weight to Pyxus International, Inc. (NYSE:PYX), around 0.04% of its 13F portfolio. Sculptor Capital is also relatively very bullish on the stock, setting aside 0.03 percent of its 13F equity portfolio to PYX.
Judging by the fact that Pyxus International, Inc. (NYSE:PYX) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few money managers that slashed their positions entirely by the end of the third quarter. Intriguingly, Mike Vranos’s Ellington dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $0.4 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Pyxus International, Inc. (NYSE:PYX) but similarly valued. These stocks are Gaiam, Inc. (NASDAQ:GAIA), Nantkwest Inc (NASDAQ:NK), Novavax, Inc. (NASDAQ:NVAX), and PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS). This group of stocks’ market valuations are similar to PYX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GAIA | 6 | 12663 | -3 |
| NK | 6 | 3375 | -1 |
| NVAX | 7 | 1967 | 4 |
| PHAS | 10 | 16101 | 2 |
| Average | 7.25 | 8527 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $8 million in PYX’s case. PhaseBio Pharmaceuticals, Inc. (NASDAQ:PHAS) is the most popular stock in this table. On the other hand Gaiam, Inc. (NASDAQ:GAIA) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Pyxus International, Inc. (NYSE:PYX) is even less popular than GAIA. Hedge funds dodged a bullet by taking a bearish stance towards PYX. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PYX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PYX investors were disappointed as the stock returned -38.6% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
