Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Perrigo Co Plc (NASDAQ:PRGO).
Is Perrigo Co Plc (NASDAQ:PRGO) the right pick for your portfolio? Hedge funds were getting less bullish. The number of bullish hedge fund positions decreased by 5 recently. Perrigo Co Plc (NASDAQ:PRGO) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 63. Our calculations also showed that PRGO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 28 hedge funds in our database with PRGO positions at the end of the second quarter.
Ken Griffin of Citadel Investment Group
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. Keeping this in mind we’re going to analyze the new hedge fund action regarding Perrigo Co Plc (NASDAQ:PRGO).
Do Hedge Funds Think PRGO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter of 2021. On the other hand, there were a total of 29 hedge funds with a bullish position in PRGO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Camber Capital Management, managed by Stephen DuBois, holds the biggest position in Perrigo Co Plc (NASDAQ:PRGO). Camber Capital Management has a $118.3 million position in the stock, comprising 3.6% of its 13F portfolio. On Camber Capital Management’s heels is Point72 Asset Management, managed by Steve Cohen, which holds a $105.7 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions contain Israel Englander’s Millennium Management, Anand Parekh’s Alyeska Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Perrigo Co Plc (NASDAQ:PRGO), around 3.74% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, designating 3.64 percent of its 13F equity portfolio to PRGO.
Since Perrigo Co Plc (NASDAQ:PRGO) has faced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their entire stakes in the third quarter. Interestingly, Michael A. Price and Amos Meron’s Empyrean Capital Partners said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, totaling close to $29.2 million in stock. Renaissance Technologies, also cut its stock, about $28.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Perrigo Co Plc (NASDAQ:PRGO). These stocks are Columbia Sportswear Company (NASDAQ:COLM), Rapid7 Inc (NASDAQ:RPD), Houlihan Lokey Inc (NYSE:HLI), II-VI, Inc. (NASDAQ:IIVI), Cyberark Software Ltd (NASDAQ:CYBR), Silicon Laboratories (NASDAQ:SLAB), and Saia Inc (NASDAQ:SAIA). All of these stocks’ market caps match PRGO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COLM | 21 | 250448 | -8 |
| RPD | 24 | 167106 | 7 |
| HLI | 18 | 183140 | 0 |
| IIVI | 24 | 250417 | -5 |
| CYBR | 20 | 414967 | -7 |
| SLAB | 18 | 207783 | 3 |
| SAIA | 27 | 539493 | 5 |
| Average | 21.7 | 287622 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $430 million in PRGO’s case. Saia Inc (NASDAQ:SAIA) is the most popular stock in this table. On the other hand Houlihan Lokey Inc (NYSE:HLI) is the least popular one with only 18 bullish hedge fund positions. Perrigo Co Plc (NASDAQ:PRGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRGO is 38.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately PRGO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PRGO were disappointed as the stock returned -22% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Perrigo Co Plc (NYSE:PRGO)
Follow Perrigo Co Plc (NYSE:PRGO)
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Disclosure: None. This article was originally published at Insider Monkey.
