Do Hedge Funds Love PTC Inc (PTC)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about PTC Inc (NASDAQ:PTC).

PTC Inc (NASDAQ:PTC) has seen a decrease in enthusiasm from smart money in recent months. PTC Inc (NASDAQ:PTC) was in 33 hedge funds’ portfolios at the end of March. The all time high for this statistic is 46. Our calculations also showed that PTC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

David S. Winter of 40 North Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a peek at the key hedge fund action surrounding PTC Inc (NASDAQ:PTC).

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

At first quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PTC over the last 23 quarters. So, let’s check out 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, David S. Winter and David J. Millstone’s 40 North Management has the biggest position in PTC Inc (NASDAQ:PTC), worth close to $439.5 million, accounting for 12.1% of its total 13F portfolio. Coming in second is Impax Asset Management, led by Ian Simm, holding a $427.6 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism encompass Panayotis Takis Sparaggis’s Alkeon Capital Management, Kevin Oram and Peter Uddo’s Praesidium Investment Management Company and Robert Joseph Caruso’s Select Equity Group. In terms of the portfolio weights assigned to each position Praesidium Investment Management Company allocated the biggest weight to PTC Inc (NASDAQ:PTC), around 13.67% of its 13F portfolio. 40 North Management is also relatively very bullish on the stock, earmarking 12.14 percent of its 13F equity portfolio to PTC.

Due to the fact that PTC Inc (NASDAQ:PTC) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their entire stakes heading into Q2. Intriguingly, Barry Lebovits and Joshua Kuntz’s Rivulet Capital sold off the biggest stake of the 750 funds watched by Insider Monkey, totaling about $130.7 million in stock. Brennan Diaz’s fund, Fernbridge Capital Management, also said goodbye to its stock, about $32.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 5 funds heading into Q2.

Let’s now review hedge fund activity in other stocks similar to PTC Inc (NASDAQ:PTC). We will take a look at Huntington Bancshares Incorporated (NASDAQ:HBAN), Clarivate Plc (NYSE:CLVT), HEICO Corporation (NYSE:HEI), Omnicom Group Inc. (NYSE:OMC), IDEX Corporation (NYSE:IEX), Pembina Pipeline Corp (NYSE:PBA), and Boston Properties, Inc. (NYSE:BXP). All of these stocks’ market caps are similar to PTC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $1137 million. That figure was $1770 million in PTC’s case. HEICO Corporation (NYSE:HEI) is the most popular stock in this table. On the other hand Pembina Pipeline Corp (NYSE:PBA) is the least popular one with only 15 bullish hedge fund positions. PTC Inc (NASDAQ:PTC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PTC is 51.5. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately PTC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PTC were disappointed as the stock returned 4.6% since the end of March (through 7/2) 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.

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