While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Performance Food Group Company (NYSE:PFGC).
Performance Food Group Company (NYSE:PFGC) was in 23 hedge funds’ portfolios at the end of September. PFGC investors should be aware of an increase in hedge fund sentiment lately. There were 19 hedge funds in our database with PFGC positions at the end of the previous quarter. Our calculations also showed that PFGC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the fresh hedge fund action encompassing Performance Food Group Company (NYSE:PFGC).
How have hedgies been trading Performance Food Group Company (NYSE:PFGC)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in PFGC a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Gregg Moskowitz’s Interval Partners has the biggest position in Performance Food Group Company (NYSE:PFGC), worth close to $28.3 million, accounting for 1.1% of its total 13F portfolio. Coming in second is Noam Gottesman of GLG Partners, with a $19.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include Principal Global Investors’s Columbus Circle Investors, Israel Englander’s Millennium Management and Anthony Joseph Vaccarino’s North Fourth Asset Management. In terms of the portfolio weights assigned to each position North Fourth Asset Management allocated the biggest weight to Performance Food Group Company (NYSE:PFGC), around 3.4% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, earmarking 3.29 percent of its 13F equity portfolio to PFGC.
Consequently, key hedge funds have jumped into Performance Food Group Company (NYSE:PFGC) headfirst. Columbus Circle Investors, managed by Principal Global Investors, assembled the most valuable position in Performance Food Group Company (NYSE:PFGC). Columbus Circle Investors had $16.1 million invested in the company at the end of the quarter. Anthony Joseph Vaccarino’s North Fourth Asset Management also initiated a $9.8 million position during the quarter. The following funds were also among the new PFGC investors: Dmitry Balyasny’s Balyasny Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Renaissance Technologies.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Performance Food Group Company (NYSE:PFGC) but similarly valued. These stocks are Rexford Industrial Realty Inc (NYSE:REXR), Silicon Laboratories Inc. (NASDAQ:SLAB), Crane Co. (NYSE:CR), and Emcor Group Inc (NYSE:EME). This group of stocks’ market caps match PFGC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| REXR | 17 | 68044 | 0 |
| SLAB | 19 | 71884 | 1 |
| CR | 21 | 336467 | -5 |
| EME | 25 | 242826 | 3 |
| Average | 20.5 | 179805 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $158 million in PFGC’s case. Emcor Group Inc (NYSE:EME) is the most popular stock in this table. On the other hand Rexford Industrial Realty Inc (NYSE:REXR) is the least popular one with only 17 bullish hedge fund positions. Performance Food Group Company (NYSE:PFGC) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PFGC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PFGC were disappointed as the stock returned 2.3% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
