Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
In this article, we are going to discuss the hedge fund sentiment towards Aramark (NYSE:ARMK). Overall, the company has registered a decrease in enthusiasm from smart money of late. At the end of this article we will also compare ARMK to other stocks including Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC), Gartner Inc (NYSE:IT), and Mid America Apartment Communities Inc (NYSE:MAA) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s analyze the new action encompassing Aramark (NYSE:ARMK).
How have hedgies been trading Aramark (NYSE:ARMK)?
Between July and September, the number of funds tracked by Insider Monkey long Aramark (NYSE:ARMK) slid by seven to 26. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Michael Lowenstein’s Kensico Capital has the number one position in Aramark (NYSE:ARMK), worth close to $325.5 million, comprising 6% of its total 13F portfolio. The second largest stake is held by Samlyn Capital, managed by Robert Pohly, which holds a $203.9 million position; 4.9% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish contain David E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group, and Michael A. Price and Amos Meron’s Empyrean Capital Partners.
Seeing as Aramark (NYSE:ARMK) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few money managers that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Lee Ainslie’s Maverick Capital dropped the biggest investment of all the hedgies followed by Insider Monkey, worth close to $226.7 million in stock. Paul Tudor Jones’ fund, Tudor Investment Corp, also cut its stock worth about $16.8 million.
Let’s go over hedge fund activity in other stocks similar to Aramark (NYSE:ARMK). We will take a look at Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC), Gartner Inc (NYSE:IT), Mid America Apartment Communities Inc (NYSE:MAA), and Scripps Networks Interactive, Inc. (NYSE:SNI). This group of stocks’ market values are closest to ARMK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TKC | 5 | 1684 | -1 |
| IT | 20 | 352111 | -2 |
| MAA | 15 | 206005 | -2 |
| SNI | 23 | 1001763 | 2 |
As you can see these stocks had an average of 16 funds with bullish positions at the end of September and the average amount invested in these stocks was $390 million. By comparison, the 26 investors from our database amassed $1.09 billion worth of ARMK’s stock. Among the stocks in the table, Scripps Networks Interactive, Inc. (NYSE:SNI) is the most popular stock, while Turkcell Iletisim Hizmetleri A.S. (ADR) (NYSE:TKC) is the least popular one with only five investors holding shares. Compared to these stocks Aramark (NYSE:ARMK) 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.
