Hedge Funds Never Been Less Bullish On Pampa Energia S.A. (PAM)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Pampa Energia S.A. (NYSE:PAM) based on that data.

Pampa Energia S.A. (NYSE:PAM) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Our calculations also showed that PAM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most traders, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are over 8000 funds in operation today, Our experts look at the crème de la crème of this group, approximately 850 funds. These investment experts administer most of the smart money’s total capital, and by paying attention to their finest investments, Insider Monkey has formulated a few investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Howard Marks of Oaktree Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the fresh hedge fund action regarding Pampa Energia S.A. (NYSE:PAM).

How have hedgies been trading Pampa Energia S.A. (NYSE:PAM)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -30% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in PAM over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, OZ Management was the largest shareholder of Pampa Energia S.A. (NYSE:PAM), with a stake worth $21.3 million reported as of the end of September. Trailing OZ Management was Oaktree Capital Management, which amassed a stake valued at $9.6 million. Marathon Asset Management, Arrowstreet Capital, 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 Marathon Asset Management allocated the biggest weight to Pampa Energia S.A. (NYSE:PAM), around 0.47% of its 13F portfolio. OZ Management is also relatively very bullish on the stock, designating 0.3 percent of its 13F equity portfolio to PAM.

Judging by the fact that Pampa Energia S.A. (NYSE:PAM) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who sold off their entire stakes in the first quarter. Intriguingly, Zach Schreiber’s Point State Capital dumped the largest stake of the 750 funds watched by Insider Monkey, comprising an estimated $27.9 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $7.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Pampa Energia S.A. (NYSE:PAM) but similarly valued. These stocks are Benchmark Electronics, Inc. (NYSE:BHE), Upwork Inc. (NASDAQ:UPWK), German American Bancorp., Inc. (NASDAQ:GABC), and Orchard Therapeutics plc (NASDAQ:ORTX). This group of stocks’ market caps are closest to PAM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BHE 14 24868 -5
UPWK 22 107524 -2
GABC 4 10399 -1
ORTX 19 200945 -3
Average 14.75 85934 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $86 million. That figure was $37 million in PAM’s case. Upwork Inc. (NASDAQ:UPWK) is the most popular stock in this table. On the other hand German American Bancorp., Inc. (NASDAQ:GABC) is the least popular one with only 4 bullish hedge fund positions. Pampa Energia S.A. (NYSE:PAM) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately PAM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PAM investors were disappointed as the stock returned 0.2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.