We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Palomar Holdings, Inc. (NASDAQ:PLMR).
Is Palomar Holdings, Inc. (NASDAQ:PLMR) the right pick for your portfolio? Prominent investors are taking a bullish view. The number of bullish hedge fund bets improved by 5 in recent months. Our calculations also showed that PLMR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the bigwigs of this club, about 750 funds. Most estimates calculate that this group of people shepherd the majority of the hedge fund industry’s total asset base, and by following their inimitable equity investments, Insider Monkey has formulated a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the fresh hedge fund action regarding Palomar Holdings, Inc. (NASDAQ:PLMR).
How are hedge funds trading Palomar Holdings, Inc. (NASDAQ:PLMR)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 63% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PLMR over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Driehaus Capital was the largest shareholder of Palomar Holdings, Inc. (NASDAQ:PLMR), with a stake worth $22.9 million reported as of the end of September. Trailing Driehaus Capital was Zimmer Partners, which amassed a stake valued at $9.4 million. Millennium Management, Brant Point Investment Management, and Point72 Asset Management 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 One Tusk Investment Partners allocated the biggest weight to Palomar Holdings, Inc. (NASDAQ:PLMR), around 2.37% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.74 percent of its 13F equity portfolio to PLMR.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the biggest position in Palomar Holdings, Inc. (NASDAQ:PLMR). Point72 Asset Management had $5.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1 million investment in the stock during the quarter. The following funds were also among the new PLMR investors: Alec Litowitz and Ross Laser’s Magnetar Capital, Michael Gelband’s ExodusPoint Capital, and Peter Muller’s PDT Partners.
Let’s check out hedge fund activity in other stocks similar to Palomar Holdings, Inc. (NASDAQ:PLMR). These stocks are American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), GasLog Partners LP (NYSE:GLOP), US Concrete Inc (NASDAQ:USCR), and Altus Midstream Company (NASDAQ:ALTM). This group of stocks’ market valuations are similar to PLMR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AXL | 20 | 80795 | 0 |
| GLOP | 6 | 15286 | 1 |
| USCR | 15 | 114418 | -2 |
| ALTM | 5 | 6127 | -2 |
| Average | 11.5 | 54157 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $53 million in PLMR’s case. American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) is the most popular stock in this table. On the other hand Altus Midstream Company (NASDAQ:ALTM) is the least popular one with only 5 bullish hedge fund positions. Palomar Holdings, Inc. (NASDAQ:PLMR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on PLMR as the stock returned 38.4% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.