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Parker-Hannifin Corporation (PH): Are Hedge Funds Right About This Stock?

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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Parker-Hannifin Corporation (NYSE:PH).

Parker-Hannifin Corporation (NYSE:PH) has seen a decrease in support from the world’s most elite money managers of late. Our calculations also showed that PH isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the eyes of most stock holders, hedge funds are seen as unimportant, outdated financial vehicles of the past. While there are greater than 8000 funds trading at the moment, Our experts choose to focus on the bigwigs of this club, about 850 funds. These money managers administer bulk of the smart money’s total asset base, and by tailing their finest investments, Insider Monkey has uncovered many investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the fresh hedge fund action encompassing Parker-Hannifin Corporation (NYSE:PH).

What have hedge funds been doing with Parker-Hannifin Corporation (NYSE:PH)?

At the end of the first quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards PH over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Parker-Hannifin Corporation (NYSE:PH) was held by Citadel Investment Group, which reported holding $245.2 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $215.6 million position. Other investors bullish on the company included Holocene Advisors, D E Shaw, and Pzena Investment Management. In terms of the portfolio weights assigned to each position Appian Way Asset Management allocated the biggest weight to Parker-Hannifin Corporation (NYSE:PH), around 3.34% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, earmarking 2.26 percent of its 13F equity portfolio to PH.

Because Parker-Hannifin Corporation (NYSE:PH) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers that slashed their full holdings in the third quarter. Interestingly, Gregg Moskowitz’s Interval Partners sold off the biggest position of all the hedgies followed by Insider Monkey, valued at an estimated $24.9 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also dumped its stock, about $7.7 million worth. These moves are important to note, as total hedge fund interest fell by 7 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Parker-Hannifin Corporation (NYSE:PH) but similarly valued. We will take a look at DocuSign, Inc. (NASDAQ:DOCU), Mettler-Toledo International Inc. (NYSE:MTD), LyondellBasell Industries NV (NYSE:LYB), and AMETEK, Inc. (NYSE:AME). All of these stocks’ market caps are closest to PH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DOCU 47 1082768 14
MTD 31 616788 2
LYB 35 474610 -5
AME 33 639873 1
Average 36.5 703510 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.5 hedge funds with bullish positions and the average amount invested in these stocks was $704 million. That figure was $889 million in PH’s case. DocuSign, Inc. (NASDAQ:DOCU) is the most popular stock in this table. On the other hand Mettler-Toledo International Inc. (NYSE:MTD) is the least popular one with only 31 bullish hedge fund positions. Parker-Hannifin Corporation (NYSE:PH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on PH as the stock returned 39.5% during the second quarter and outperformed the market by an even larger margin.

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