Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Penske Automotive Group, Inc. (NYSE:PAG) from the perspective of those elite funds.
Is Penske Automotive Group, Inc. (NYSE:PAG) a bargain? Hedge funds are taking a bullish view. The number of bullish hedge fund positions went up by 3 in recent months. Our calculations also showed that pag isn’t among the 30 most popular stocks among hedge funds. PAG was in 20 hedge funds’ portfolios at the end of the third quarter of 2018. There were 17 hedge funds in our database with PAG positions at the end of the previous quarter.
To the average investor there are a large number of tools investors have at their disposal to evaluate publicly traded companies. Some of the best tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the S&P 500 by a solid amount (see the details here).
Let’s check out the key hedge fund action regarding Penske Automotive Group, Inc. (NYSE:PAG).
How are hedge funds trading Penske Automotive Group, Inc. (NYSE:PAG)?
Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PAG over the last 13 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Penske Automotive Group, Inc. (NYSE:PAG), with a stake worth $24.8 million reported as of the end of September. Trailing GAMCO Investors was Marshall Wace LLP, which amassed a stake valued at $17.6 million. AQR Capital Management, Millennium Management, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Penske Automotive Group, Inc. (NYSE:PAG). Marshall Wace LLP had $17.6 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $1.5 million position during the quarter. The following funds were also among the new PAG investors: Paul Tudor Jones’s Tudor Investment Corp, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and George Hall’s Clinton Group.
Let’s also examine hedge fund activity in other stocks similar to Penske Automotive Group, Inc. (NYSE:PAG). These stocks are Clean Harbors Inc (NYSE:CLH), Corelogic Inc (NYSE:CLGX), First Financial Bankshares Inc (NASDAQ:FFIN), and Axon Enterprise, Inc. (NASDAQ:AAXN). This group of stocks’ market caps resemble PAG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLH | 18 | 238648 | 5 |
| CLGX | 20 | 378350 | 4 |
| FFIN | 6 | 10038 | 0 |
| AAXN | 16 | 439775 | -12 |
| Average | 15 | 266703 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $94 million in PAG’s case. Corelogic Inc (NYSE:CLGX) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 6 bullish hedge fund positions. Penske Automotive Group, Inc. (NYSE:PAG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CLGX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
