Did The Smart Money Get Primo Water Corporation (PRMW) Right?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Primo Water Corporation (NYSE:PRMW) based on that data and determine whether they were really smart about the stock.

Is Primo Water Corporation (NYSE:PRMW) the right investment to pursue these days? Investors who are in the know were becoming more confident. The number of long hedge fund positions inched up by 7 recently. Primo Water Corporation (NYSE:PRMW) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 36. Our calculations also showed that PRMW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 24 hedge funds in our database with PRMW positions at the end of the second quarter.

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 take a glance at the latest hedge fund action surrounding Primo Water Corporation (NYSE:PRMW).

Kevin Oram of Praesidium Investment Management Company

Do Hedge Funds Think PRMW Is A Good Stock To Buy Now?

At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in PRMW a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Nitorum Capital, managed by Seth Rosen, holds the most valuable position in Primo Water Corporation (NYSE:PRMW). Nitorum Capital has a $134.7 million position in the stock, comprising 6.4% of its 13F portfolio. On Nitorum Capital’s heels is Praesidium Investment Management Company, led by Kevin Oram and Peter Uddo, holding a $110.2 million position; 6.1% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism comprise David S. Winter and David J. Millstone’s 40 North Management, Claus Moller’s P2 Capital Partners and Brian Gootzeit and Andrew Frank’s StackLine Partners. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to Primo Water Corporation (NYSE:PRMW), around 15.61% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, dishing out 6.41 percent of its 13F equity portfolio to PRMW.

As aggregate interest increased, key hedge funds have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, initiated the biggest position in Primo Water Corporation (NYSE:PRMW). ExodusPoint Capital had $8.1 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also made a $4.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Rechtschaffen’s AREX Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s also examine hedge fund activity in other stocks similar to Primo Water Corporation (NYSE:PRMW). We will take a look at Myriad Genetics, Inc. (NASDAQ:MYGN), Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE:VLRS), Independent Bank Corp (NASDAQ:INDB), Rush Enterprises, Inc. (NASDAQ:RUSHA), Triumph Bancorp Inc (NASDAQ:TBK), Black Stone Minerals LP (NYSE:BSM), and Celldex Therapeutics, Inc. (NASDAQ:CLDX). All of these stocks’ market caps resemble PRMW’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $617 million in PRMW’s case. Celldex Therapeutics, Inc. (NASDAQ:CLDX) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Primo Water Corporation (NYSE:PRMW) is more popular among hedge funds. Our overall hedge fund sentiment score for PRMW is 85.8. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on PRMW as the stock returned 6.6% since the end of September (through 1/31) 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.

Suggested Articles:

• Top 10 Agriculture Stocks To Buy Now
• 14 Best European Dividend Stocks To Buy
• 12 Best Infrastructure Stocks To Buy Now

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