How Did PTC Inc (PTC) Compare Against Top Hedge Fund Stocks in 2019?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ complex research processes to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we pay special attention to the hedge fund activity in the small-cap space. Nevertheless, it is also possible to find underpriced large-cap stocks by following the hedge funds’ moves. In this article, we look at what those funds think of PTC Inc (NASDAQ:PTC) based on that data.

PTC Inc (NASDAQ:PTC) shareholders have witnessed an increase in hedge fund sentiment in recent months. Our calculations also showed that PTC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In today’s marketplace there are numerous methods stock market investors have at their disposal to value publicly traded companies. Some of the most under-the-radar methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the S&P 500 by a healthy margin (see the details here).

Michael Lowenstein Kensico Capital

Michael Lowenstein of Kensico Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now let’s take a look at the recent hedge fund action surrounding PTC Inc (NASDAQ:PTC).

How have hedgies been trading PTC Inc (NASDAQ:PTC)?

Heading into the fourth quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the second quarter of 2019. By comparison, 46 hedge funds held shares or bullish call options in PTC a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David S. Winter and David J. Millstone’s 40 North Management has the number one position in PTC Inc (NASDAQ:PTC), worth close to $200.2 million, comprising 17.9% of its total 13F portfolio. The second largest stake is held by Select Equity Group, led by Robert Joseph Caruso, holding a $123.7 million position; 0.8% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism consist of Kevin Oram and Peter Uddo’s Praesidium Investment Management, Ian Simm’s Impax Asset Management and Michael Lowenstein’s Kensico Capital. In terms of the portfolio weights assigned to each position 40 North Management allocated the biggest weight to PTC Inc (NASDAQ:PTC), around 17.88% of its 13F portfolio. Praesidium Investment Management is also relatively very bullish on the stock, designating 7.71 percent of its 13F equity portfolio to PTC.

Consequently, key money managers were leading the bulls’ herd. Kensico Capital, managed by Michael Lowenstein, created the biggest position in PTC Inc (NASDAQ:PTC). Kensico Capital had $61.7 million invested in the company at the end of the quarter. David Goel and Paul Ferri’s Matrix Capital Management also made a $39.7 million investment in the stock during the quarter. The other funds with brand new PTC positions are Dmitry Balyasny’s Balyasny Asset Management, Larry Foley and Paul Farrell’s Bronson Point Partners, and Mark N. Diker’s Diker Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PTC Inc (NASDAQ:PTC) but similarly valued. We will take a look at Athene Holding Ltd. (NYSE:ATH), A. O. Smith Corporation (NYSE:AOS), The Toro Company (NYSE:TTC), and American Homes 4 Rent (NYSE:AMH). All of these stocks’ market caps resemble PTC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATH 39 1453694 0
AOS 18 330010 -4
TTC 19 688727 -5
AMH 23 432164 -2
Average 24.75 726149 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $726 million. That figure was $809 million in PTC’s case. Athene Holding Ltd. (NYSE:ATH) is the most popular stock in this table. On the other hand A. O. Smith Corporation (NYSE:AOS) is the least popular one with only 18 bullish hedge fund positions. PTC Inc (NASDAQ:PTC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately PTC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PTC were disappointed as the stock returned -9.7% in 2019 and trailed 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 many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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