We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards PPG Industries, Inc. (NYSE:PPG) and determine whether hedge funds skillfully traded this stock.
Is PPG Industries, Inc. (NYSE:PPG) a bargain? Hedge funds were buying. The number of long hedge fund positions went up by 4 in recent months. PPG Industries, Inc. (NYSE:PPG) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 51. Our calculations also showed that PPG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Donald Sussman of Paloma Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to check out the fresh hedge fund action encompassing PPG Industries, Inc. (NYSE:PPG).
Do Hedge Funds Think PPG Is A Good Stock To Buy Now?
At third quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in PPG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in PPG Industries, Inc. (NYSE:PPG), which was worth $93.3 million at the end of the third quarter. On the second spot was Bridgewater Associates which amassed $52 million worth of shares. AQR Capital Management, Adage Capital Management, and Citadel Investment Group 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 Quantamental Technologies allocated the biggest weight to PPG Industries, Inc. (NYSE:PPG), around 1.17% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, dishing out 1.01 percent of its 13F equity portfolio to PPG.
Consequently, key hedge funds were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, initiated the largest position in PPG Industries, Inc. (NYSE:PPG). ExodusPoint Capital had $14 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $5 million position during the quarter. The following funds were also among the new PPG investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’s Tudor Investment Corp, and Andrew Weiss’s Weiss Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PPG Industries, Inc. (NYSE:PPG) but similarly valued. We will take a look at BeiGene, Ltd. (NASDAQ:BGNE), Xcel Energy Inc (NYSE:XEL), The Trade Desk, Inc. (NASDAQ:TTD), Archer Daniels Midland Company (NYSE:ADM), Old Dominion Freight Line (NASDAQ:ODFL), Copart, Inc. (NASDAQ:CPRT), and Pinterest, Inc. (NYSE:PINS). This group of stocks’ market values are closest to PPG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BGNE | 16 | 6418381 | -5 |
| XEL | 26 | 498007 | 4 |
| TTD | 19 | 499103 | -6 |
| ADM | 27 | 351486 | -14 |
| ODFL | 33 | 709810 | -14 |
| CPRT | 42 | 998095 | -2 |
| PINS | 58 | 2006795 | -5 |
| Average | 31.6 | 1640240 | -6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $1640 million. That figure was $318 million in PPG’s case. Pinterest, Inc. (NYSE:PINS) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 16 bullish hedge fund positions. PPG Industries, Inc. (NYSE:PPG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PPG is 43.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on PPG as the stock returned 9.6% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.
Follow Ppg Industries Inc (NYSE:PPG)
Follow Ppg Industries Inc (NYSE:PPG)
Suggested Articles:
- 15 Most Sustainable Companies In the United States
- Top 20 Gold Mining Companies In The World
- 10 Best SPACs to Invest In According to Reddit
Disclosure: None. This article was originally published at Insider Monkey.
