At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is PriceSmart, Inc. (NASDAQ:PSMT) a buy right now? Hedge funds are taking a bullish view. The number of long hedge fund bets rose by 2 lately. Our calculations also showed that PSMT isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are dozens of formulas stock market investors have at their disposal to appraise their stock investments. Some of the most underrated formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the broader indices by a superb amount (see the details here).
Let’s analyze the fresh hedge fund action surrounding PriceSmart, Inc. (NASDAQ:PSMT).
How are hedge funds trading PriceSmart, Inc. (NASDAQ:PSMT)?
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 25% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in PSMT over the last 15 quarters. So, let’s examine 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, Jim Simons’s Renaissance Technologies has the most valuable position in PriceSmart, Inc. (NASDAQ:PSMT), worth close to $23.8 million, comprising less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Citadel Investment Group, led by Ken Griffin, holding a $6.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish encompass Israel Englander’s Millennium Management, Matthew Hulsizer’s PEAK6 Capital Management and D. E. Shaw’s D E Shaw.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in PriceSmart, Inc. (NASDAQ:PSMT). D E Shaw had $1.1 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.8 million position during the quarter. The only other fund with a new position in the stock is Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now review hedge fund activity in other stocks similar to PriceSmart, Inc. (NASDAQ:PSMT). These stocks are BGC Partners, Inc. (NASDAQ:BGCP), TowneBank (NASDAQ:TOWN), Livent Corporation (NYSE:LTHM), and Tenneco Inc (NYSE:TEN). All of these stocks’ market caps match PSMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BGCP | 26 | 252988 | 3 |
| TOWN | 7 | 33308 | -1 |
| LTHM | 25 | 358707 | 15 |
| TEN | 26 | 195221 | 1 |
| Average | 21 | 210056 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $210 million. That figure was $42 million in PSMT’s case. BGC Partners, Inc. (NASDAQ:BGCP) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 7 bullish hedge fund positions. PriceSmart, Inc. (NASDAQ:PSMT) 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 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 PSMT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PSMT investors were disappointed as the stock returned -10.9% during the same time 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
