More and More Hedge Funds Going Long Aramark (ARMK)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 5.2% in the 12 month-period that ended October 30, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular S&P 500 stocks among the hedge fund investors tracked by the Insider Monkey team returned 9.5% over the same period, which provides evidence that these money managers do have great stock picking abilities. Even more to that, 63% of these stocks managed to beat the S&P 500 Index. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Aramark (NYSE:ARMK).

Aramark (NYSE:ARMK) investors should be aware of a big increase in hedge fund sentiment in recent months, with 53 investors now holding positions in the stock. At the end of this article, we will also compare Aramark (NYSE:ARMK) to other stocks including DENTSPLY International Inc. (NASDAQ:XRAY), WhiteWave Foods Co (NYSE:WWAV), and Torchmark Corporation (NYSE:TMK) to get a better sense of its popularity.

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In the eyes of most market participants, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are over 8,000 funds with their doors open today, we choose to focus on the moguls of this group, around 700 funds. These money managers shepherd the majority of the smart money’s total asset base, and by tailing their finest investments, Insider Monkey has unsheathed various investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s go over the new action surrounding Aramark (NYSE:ARMK).

What have hedge funds been doing with Aramark (NYSE:ARMK)?

At the end of the third quarter, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 29% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Lee Ainslie’s Maverick Capital has the most valuable position in Aramark (NYSE:ARMK), worth close to $462.8 million, amounting to 7.9% of its total 13F portfolio. The second-largest stake is held by Senator Investment Group, managed by Doug Silverman and Alexander Klabin, which holds a $266.8 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Remaining peers that are bullish encompass Michael Lowenstein’s Kensico Capital, Robert Pohly’s Samlyn Capital, and David Gallo’s Valinor Management LLC.

With general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. JANA Partners, managed by Barry Rosenstein, established the biggest position in Aramark (NYSE:ARMK). JANA Partners had $98.4 million invested in the company at the end of the quarter. Brian Jackelow’s SAB Capital Management also made a $53.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Jay Petschek and Steven Major’s Corsair Capital Management, Steve Cohen’s family office Point72 Asset Management, and Louis Bacon’s Moore Global Investments.

Let’s now review hedge fund activity in other stocks similar to Aramark (NYSE:ARMK). These stocks are DENTSPLY International Inc. (NASDAQ:XRAY), The WhiteWave Foods Co (NYSE:WWAV), Torchmark Corporation (NYSE:TMK), and CDW Corp (NASDAQ:CDW). This group of stocks’ market values are similar to Aramark (NYSE:ARMK)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
XRAY 29 807345 8
WWAV 33 690741 3
TMK 24 547957 10
CDW 29 510900 2

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $2.69 billion in Aramark (NYSE:ARMK)’s case. The WhiteWave Foods Co (NYSE:WWAV) is the most popular stock in this table. On the other hand, Torchmark Corporation (NYSE:TMK) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Aramark (NYSE:ARMK) is more popular among hedge funds. Considering that hedge funds are extremely 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.