In this article we will take a look at whether hedge funds think Polaris Inc. (NYSE:PII) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Polaris Inc. (NYSE:PII) has experienced a decrease in support from the world’s most elite money managers lately. Our calculations also showed that PII 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.
To the average investor there are tons of formulas shareholders employ to value their holdings. A pair of the best formulas are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the broader indices by a significant margin (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. Keeping this in mind let’s take a glance at the new hedge fund action surrounding Polaris Inc. (NYSE:PII).
Hedge fund activity in Polaris Inc. (NYSE:PII)
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the fourth quarter of 2019. By comparison, 16 hedge funds held shares or bullish call options in PII a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Polaris Inc. (NYSE:PII). Citadel Investment Group has a $44.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $39.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Cliff Asness’s AQR Capital Management, Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Shellback Capital allocated the biggest weight to Polaris Inc. (NYSE:PII), around 0.59% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.32 percent of its 13F equity portfolio to PII.
Judging by the fact that Polaris Inc. (NYSE:PII) has witnessed bearish sentiment from the smart money, we can see that there is a sect of fund managers that elected to cut their full holdings by the end of the first quarter. Interestingly, Robert Bishop’s Impala Asset Management sold off the largest position of the “upper crust” of funds followed by Insider Monkey, worth close to $17.3 million in stock, and Larry Foley and Paul Farrell’s Bronson Point Partners was right behind this move, as the fund dumped about $9.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Polaris Inc. (NYSE:PII) but similarly valued. We will take a look at Selective Insurance Group (NASDAQ:SIGI), BlackLine, Inc. (NASDAQ:BL), Texas Pacific Land Trust (NYSE:TPL), and Wyndham Hotels & Resorts, Inc. (NYSE:WH). This group of stocks’ market values are closest to PII’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $360 million. That figure was $157 million in PII’s case. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is the most popular stock in this table. On the other hand Texas Pacific Land Trust (NYSE:TPL) is the least popular one with only 14 bullish hedge fund positions. Polaris Inc. (NYSE:PII) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on PII as the stock returned 101.1% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.