Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards PACCAR Inc (NASDAQ:PCAR).
PACCAR Inc (NASDAQ:PCAR) has seen an increase in hedge fund sentiment in recent months. PCAR was in 34 hedge funds’ portfolios at the end of September. There were 27 hedge funds in our database with PCAR holdings at the end of the previous quarter. At the end of this article we will also compare PCAR to other stocks including Western Digital Corp. (NASDAQ:WDC), Twitter Inc (NYSE:TWTR), and Boston Properties, Inc. (NYSE:BXP) to get a better sense of its popularity.
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At the moment there are several metrics shareholders put to use to grade publicly traded companies. Two of the most underrated metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can trounce the broader indices by a healthy amount (see the details here).
Now, we’re going to take a peek at the recent action regarding PACCAR Inc (NASDAQ:PCAR).
How have hedgies been trading PACCAR Inc (NASDAQ:PCAR)?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from one quarter earlier. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Anchor Bolt Capital, managed by Robert Polak, holds the largest position in PACCAR Inc (NASDAQ:PCAR). Anchor Bolt Capital has a $61.8 million position in the stock, comprising 2.1% of its 13F portfolio. Coming in second is Legg Mason Capital Management, led by Bill Miller, holding a $58.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Joel Greenblatt’s Gotham Asset Management, Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners and Israel Englander’s Millennium Management.
As aggregate interest increased, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established a position in PACCAR Inc (NASDAQ:PCAR). Two Sigma Advisors had $29.7 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $12.2 million position during the quarter. The following funds were also among the new PCAR investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, George Hall’s Clinton Group, and Tom Gayner’s Markel Gayner Asset Management.
Let’s now review hedge fund activity in other stocks similar to PACCAR Inc (NASDAQ:PCAR). These stocks are Western Digital Corp. (NASDAQ:WDC), Twitter Inc (NYSE:TWTR), Boston Properties, Inc. (NYSE:BXP), and Sasol Limited (ADR) (NYSE:SSL). All of these stocks’ market caps are closest to PCAR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WDC | 51 | 2249022 | 2 |
| TWTR | 27 | 248317 | -20 |
| BXP | 21 | 651123 | -6 |
| SSL | 10 | 26608 | 3 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $451 million in PCAR’s case. Western Digital Corp. (NASDAQ:WDC) is the most popular stock in this table. On the other hand, Sasol Limited (ADR) (NYSE:SSL) is the least popular one with only 10 bullish hedge fund positions. PACCAR Inc (NASDAQ:PCAR) 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 collectively most bullish on. In this regard, WDC might be a better alternative.
