Is PJT A Good Stock To Buy Now?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider PJT Partners Inc (NYSE:PJT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is PJT a good stock to buy now? Investors who are in the know were becoming less confident. The number of long hedge fund bets went down by 5 in recent months. PJT Partners Inc (NYSE:PJT) was in 16 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that PJT 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.

Mark Rachesky MHR

Mark Rachesky of MHR Fund Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we’re going to analyze the fresh hedge fund action regarding PJT Partners Inc (NYSE:PJT).

Do Hedge Funds Think PJT Is A Good Stock To Buy Now?

At third quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from the second quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in PJT a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, MHR Fund Management was the largest shareholder of PJT Partners Inc (NYSE:PJT), with a stake worth $53.4 million reported as of the end of September. Trailing MHR Fund Management was Arrowstreet Capital, which amassed a stake valued at $10.3 million. Tudor Investment Corp, GAMCO Investors, and Driehaus Capital 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 MHR Fund Management allocated the biggest weight to PJT Partners Inc (NYSE:PJT), around 4.25% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, designating 0.62 percent of its 13F equity portfolio to PJT.

Judging by the fact that PJT Partners Inc (NYSE:PJT) has experienced falling interest from hedge fund managers, it’s safe to say that there exists a select few funds that elected to cut their positions entirely last quarter. Interestingly, Israel Englander’s Millennium Management dumped the largest position of the 750 funds followed by Insider Monkey, totaling about $13.1 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $1.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to PJT Partners Inc (NYSE:PJT). These stocks are Macquarie Infrastructure Corporation (NYSE:MIC), Umpqua Holdings Corp (NASDAQ:UMPQ), ADC Therapeutics SA (NYSE:ADCT), DCP Midstream LP (NYSE:DCP), Patterson Companies, Inc. (NASDAQ:PDCO), ViaSat, Inc. (NASDAQ:VSAT), and Cushman & Wakefield plc (NYSE:CWK). This group of stocks’ market valuations resemble PJT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MIC 31 519679 -7
UMPQ 26 202936 2
ADCT 19 384941 4
DCP 3 5523 1
PDCO 18 82656 -4
VSAT 30 907647 7
CWK 12 87064 -5
Average 19.9 312921 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $101 million in PJT’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 3 bullish hedge fund positions. PJT Partners Inc (NYSE:PJT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PJT is 45. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on PJT as the stock returned 26.2% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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