The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at PTC Inc (NASDAQ:PTC) from the perspective of those elite funds.
Is PTC Inc (NASDAQ:PTC) an outstanding stock to buy now? Prominent investors are becoming less confident. The number of long hedge fund positions went down by 15 lately. Our calculations also showed that PTC isn’t among the 30 most popular stocks among hedge funds. PTC was in 31 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 46 hedge funds in our database with PTC holdings at the end of the previous quarter.
In the eyes of most investors, hedge funds are seen as underperforming, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, Our experts look at the upper echelon of this group, about 750 funds. These hedge fund managers orchestrate most of the smart money’s total asset base, and by observing their highest performing picks, Insider Monkey has discovered a few investment strategies that have historically outrun the market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to take a peek at the key hedge fund action regarding PTC Inc (NASDAQ:PTC).
What does the smart money think about PTC Inc (NASDAQ:PTC)?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in PTC a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of PTC Inc (NASDAQ:PTC), with a stake worth $247.2 million reported as of the end of September. Trailing Select Equity Group was OZ Management, which amassed a stake valued at $174 million. Praesidium Investment Management Company, Impax Asset Management, and Holocene Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as PTC Inc (NASDAQ:PTC) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers that decided to sell off their entire stakes heading into Q3. At the top of the heap, Robert Boucai’s Newbrook Capital Advisors cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth about $93.1 million in stock. Zach Schreiber’s fund, Point State Capital, also sold off its stock, about $67.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 15 funds heading into Q3.
Let’s check out hedge fund activity in other stocks similar to PTC Inc (NASDAQ:PTC). These stocks are The Gap Inc. (NYSE:GPS), F5 Networks, Inc. (NASDAQ:FFIV), Huaneng Power International Inc (NYSE:HNP), and Tiffany & Co. (NYSE:TIF). This group of stocks’ market values match PTC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GPS | 20 | 221936 | -9 |
| FFIV | 24 | 1091362 | 0 |
| HNP | 3 | 1184 | -1 |
| TIF | 30 | 1225531 | -13 |
| Average | 19.25 | 635003 | -5.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $635 million. That figure was $1395 million in PTC’s case. Tiffany & Co. (NYSE:TIF) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks PTC Inc (NASDAQ:PTC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately PTC wasn’t in this group. Hedge funds that bet on PTC were disappointed as the stock returned 10% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
