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 PRA Group, Inc. (NASDAQ:PRAA).
Is PRA Group, Inc. (NASDAQ:PRAA) a buy here? Hedge funds are becoming hopeful. The number of long hedge fund bets went up by 2 lately. Our calculations also showed that PRAA 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). PRAA was in 14 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with PRAA positions at the end of the previous quarter.
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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Howard Marks of Oaktree Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the new hedge fund action surrounding PRA Group, Inc. (NASDAQ:PRAA).
How have hedgies been trading PRA Group, Inc. (NASDAQ:PRAA)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in PRAA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of PRA Group, Inc. (NASDAQ:PRAA), with a stake worth $20.5 million reported as of the end of September. Trailing D E Shaw was Renaissance Technologies, which amassed a stake valued at $7.4 million. Citadel Investment Group, Water Street Capital, and Intrinsic Edge 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 Water Street Capital allocated the biggest weight to PRA Group, Inc. (NASDAQ:PRAA), around 0.65% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to PRAA.
As one would reasonably expect, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the largest position in PRA Group, Inc. (NASDAQ:PRAA). Millennium Management had $2.3 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $1.9 million investment in the stock during the quarter. The only other fund with a brand new PRAA position is Paul Tudor Jones’s Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to PRA Group, Inc. (NASDAQ:PRAA). We will take a look at Twist Bioscience Corporation (NASDAQ:TWST), Knowles Corp (NYSE:KN), Northwest Bancshares, Inc. (NASDAQ:NWBI), and Cardiovascular Systems Inc (NASDAQ:CSII). This group of stocks’ market valuations match PRAA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWST | 16 | 216481 | 1 |
| KN | 20 | 205594 | -9 |
| NWBI | 14 | 20443 | -5 |
| CSII | 12 | 86525 | -4 |
| Average | 15.5 | 132261 | -4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $51 million in PRAA’s case. Knowles Corp (NYSE:KN) is the most popular stock in this table. On the other hand Cardiovascular Systems Inc (NASDAQ:CSII) is the least popular one with only 12 bullish hedge fund positions. PRA Group, Inc. (NASDAQ:PRAA) 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on PRAA as the stock returned 39.3% 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.
