Were Hedge Funds Right About PJT Partners Inc (PJT)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is PJT Partners Inc (NYSE:PJT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is PJT Partners Inc (NYSE:PJT) the right pick for your portfolio? Prominent investors are in an optimistic mood. The number of bullish hedge fund positions rose by 3 lately. Our calculations also showed that PJT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). PJT was in 20 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 17 hedge funds in our database with PJT holdings at the end of the previous quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. 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

We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to review the latest hedge fund action regarding PJT Partners Inc (NYSE:PJT).

Hedge fund activity in PJT Partners Inc (NYSE:PJT)

At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PJT over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in PJT Partners Inc (NYSE:PJT) was held by Corsair Capital LLC, which reported holding $61 million worth of stock at the end of September. It was followed by MHR Fund Management with a $39.7 million position. Other investors bullish on the company included Millennium Management, Sessa Capital, and GAMCO Investors. In terms of the portfolio weights assigned to each position Corsair Capital LLC allocated the biggest weight to PJT Partners Inc (NYSE:PJT), around 100% of its 13F portfolio. MHR Fund Management is also relatively very bullish on the stock, earmarking 3.32 percent of its 13F equity portfolio to PJT.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), initiated the biggest position in PJT Partners Inc (NYSE:PJT). Schonfeld Strategic Advisors had $0.4 million invested in the company at the end of the quarter. Hoon Kim’s Quantinno Capital also initiated a $0.4 million position during the quarter. The following funds were also among the new PJT investors: Renaissance Technologies, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Frederick DiSanto’s Ancora Advisors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as PJT Partners Inc (NYSE:PJT) but similarly valued. These stocks are Usa Compression Partners LP (NYSE:USAC), Hub Group Inc (NASDAQ:HUBG), Matson, Inc. (NYSE:MATX), and IAMGOLD Corporation (NYSE:IAG). This group of stocks’ market caps are similar to PJT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
USAC 8 19195 4
HUBG 19 285556 -4
MATX 10 5900 0
IAG 17 164270 3
Average 13.5 118730 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $156 million in PJT’s case. Hub Group Inc (NASDAQ:HUBG) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks PJT Partners Inc (NYSE:PJT) is more popular among hedge funds. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still managed to beat the market by 4.2 percentage points. Hedge funds were also right about betting on PJT as the stock returned 3.6% so far in 2020 (through April 6th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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