Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in PJT Partners Inc (NYSE:PJT)? The smart money sentiment can provide an answer to this question.
Is PJT Partners Inc (NYSE:PJT) a healthy stock for your portfolio? The smart money is getting more optimistic. The number of long hedge fund bets went up by 2 lately. Our calculations also showed that PJT isn’t among the 30 most popular stocks among hedge funds. PJT was in 17 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with PJT positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the new hedge fund action regarding PJT Partners Inc (NYSE:PJT).
How are hedge funds trading PJT Partners Inc (NYSE:PJT)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in PJT heading into this year. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, MHR Fund Management, managed by Mark Rachesky, holds the most valuable position in PJT Partners Inc (NYSE:PJT). MHR Fund Management has a $46.1 million position in the stock, comprising 2.5% of its 13F portfolio. Sitting at the No. 2 spot is John Petry of Sessa Capital, with a $43.7 million position; 5.7% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions contain Jim Simons’s Renaissance Technologies, Mario Gabelli’s GAMCO Investors and John D. Gillespie’s Prospector Partners.
Now, key hedge funds were breaking ground themselves. Ellington, managed by Mike Vranos, initiated the most valuable position in PJT Partners Inc (NYSE:PJT). Ellington had $0.3 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $0.3 million position during the quarter. The only other fund with a brand new PJT position is Frederick DiSanto’s Ancora Advisors.
Let’s now review hedge fund activity in other stocks similar to PJT Partners Inc (NYSE:PJT). These stocks are Quad/Graphics, Inc. (NYSE:QUAD), Alamo Group, Inc. (NYSE:ALG), GoPro Inc (NASDAQ:GPRO), and Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). This group of stocks’ market valuations are closest to PJT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QUAD | 13 | 29317 | 1 |
| ALG | 13 | 199431 | 0 |
| GPRO | 14 | 101985 | 0 |
| IOVA | 27 | 512208 | 7 |
| Average | 16.75 | 210735 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $135 million in PJT’s case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Quad/Graphics, Inc. (NYSE:QUAD) is the least popular one with only 13 bullish hedge fund positions. PJT Partners Inc (NYSE:PJT) 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 IOVA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
