The market has been volatile in the last 6 months as the Federal Reserve continued its rate hikes and then abruptly reversed its stance and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 9 percentage points. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q4 and the beginning of Q1. In this article, we analyze what the smart money thinks of Pyxus International, Inc. (NYSE:PYX) and find out how it is affected by hedge funds’ moves.
Pyxus International, Inc. (NYSE:PYX) has experienced an increase in hedge fund interest of late. Our calculations also showed that PYX isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
We’re going to analyze the recent hedge fund action encompassing Pyxus International, Inc. (NYSE:PYX).
How are hedge funds trading Pyxus International, Inc. (NYSE:PYX)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 67% from the fourth quarter of 2018. By comparison, 0 hedge funds held shares or bullish call options in PYX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Pyxus International, Inc. (NYSE:PYX) was held by AQR Capital Management, which reported holding $6.5 million worth of stock at the end of March. It was followed by OZ Management with a $4.6 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace LLP, and D E Shaw.
As one would reasonably expect, some big names have jumped into Pyxus International, Inc. (NYSE:PYX) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Pyxus International, Inc. (NYSE:PYX). Marshall Wace LLP had $1.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.7 million investment in the stock during the quarter. The other funds with brand new PYX positions are Joel Greenblatt’s Gotham Asset Management, Israel Englander’s Millennium Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Pyxus International, Inc. (NYSE:PYX) but similarly valued. These stocks are Genie Energy Ltd (NYSE:GNE), The Joint Corp. (NASDAQ:JYNT), Stratus Properties Inc. (NASDAQ:STRS), and First Bank (NASDAQ:FRBA). This group of stocks’ market caps are similar to PYX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GNE | 9 | 8601 | -2 |
| JYNT | 9 | 51071 | 3 |
| STRS | 3 | 32568 | -1 |
| FRBA | 3 | 5888 | -1 |
| Average | 6 | 24532 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $17 million in PYX’s case. Genie Energy Ltd (NYSE:GNE) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Pyxus International, Inc. (NYSE:PYX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately PYX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PYX were disappointed as the stock returned -39.8% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.