Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Polaris Inc. (NYSE:PII) changed recently.
Is PII a good stock to buy now? Prominent investors were in an optimistic mood. The number of bullish hedge fund bets advanced by 5 in recent months. Polaris Inc. (NYSE:PII) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PII isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to check out the key hedge fund action surrounding Polaris Inc. (NYSE:PII).
Do Hedge Funds Think PII Is A Good Stock To Buy Now?
At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in PII a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of Polaris Inc. (NYSE:PII), with a stake worth $76.9 million reported as of the end of September. Trailing Arrowstreet Capital was Fisher Asset Management, which amassed a stake valued at $57.2 million. SRS Investment Management, AQR Capital Management, and Alyeska Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Silver Heights Capital Management allocated the biggest weight to Polaris Inc. (NYSE:PII), around 14.05% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, earmarking 4.19 percent of its 13F equity portfolio to PII.
As industrywide interest jumped, some big names have jumped into Polaris Inc. (NYSE:PII) headfirst. Scopus Asset Management, managed by Alexander Mitchell, created the most valuable position in Polaris Inc. (NYSE:PII). Scopus Asset Management had $17.6 million invested in the company at the end of the quarter. Brian Sheehy’s Iszo Capital also initiated a $8.4 million position during the quarter. The following funds were also among the new PII investors: Sander Gerber’s Hudson Bay Capital Management, Joel Greenblatt’s Gotham Asset Management, and Elise Di Vincenzo Crumbine’s Stormborn Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Polaris Inc. (NYSE:PII). We will take a look at Stericycle Inc (NASDAQ:SRCL), Axon Enterprise, Inc. (NASDAQ:AAXN), Columbia Sportswear Company (NASDAQ:COLM), Cemex SAB de CV (NYSE:CX), FirstService Corporation (TSE:FSV), BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), and InVitae Corporation (NYSE:NVTA). This group of stocks’ market caps are similar to PII’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRCL | 25 | 782931 | 2 |
| AAXN | 32 | 527511 | -7 |
| COLM | 19 | 48542 | 2 |
| CX | 16 | 282686 | 3 |
| FSV | 12 | 218348 | 1 |
| BJ | 31 | 259627 | 0 |
| NVTA | 24 | 1221576 | 8 |
| Average | 22.7 | 477317 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $477 million. That figure was $549 million in PII’s case. Axon Enterprise, Inc. (NASDAQ:AAXN) is the most popular stock in this table. On the other hand FirstService Corporation (TSE:FSV) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Polaris Inc. (NYSE:PII) is more popular among hedge funds. Our overall hedge fund sentiment score for PII is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Unfortunately PII wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PII were disappointed as the stock returned 5.9% since the end of the third quarter (through 12/18) 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 most of these stocks already outperformed the market in 2020.
Follow Polaris Inc. (NYSE:PII)
Follow Polaris Inc. (NYSE:PII)
Disclosure: None. This article was originally published at Insider Monkey.
