Along with its affiliated funds, Glenn J. Krevlin‘s Glenhill Advisors has cut its stake in Pep Boys-Manny Moe and Jack (NYSE:PBY) by about 398,000 shares to 3.35 million shares, according to a recent SEC filing. The current holding represents 6.2% of the company’s outstanding common stock and comprises about 2.80 million shares with sole voting and dispositive power and 553,100 shares with shared voting and dispositive power.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Glenn launched his New York-based hedge fund in 2001 after being a General Partner at Cumberland Associates LLC for six years. Prior to that he had worked at Goldman Sachs for eight years. Glenhill employs a long/short strategy to primarily invest in smaller-cap companies. Currently, the fund has about $2.38 billion worth of assets under management and the market value of its public equity portfolio stood at $1.27 billion at the end of March, with the largest equity holdings being Sinclair Broadcast Group Inc (NASDAQ:SBGI), and Air Products & Chemicals, Inc. (NYSE:APD). The consumer discretionary sector represented 36% of the fund’s portfolio value.
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The current slashing of Glenhill’s stake in Pep Boys-Manny Moe and Jack (NYSE:PBY) comes on the heels of a relatively small addition of 13,800 shares by the fund last month. Glenhill has also changed the nature of its holding from activist to passive, most probably owing to ongoing activism from Mario Gabelli‘s GAMCO Investors, which holds about 10.17 million shares of Pep Boys-Manny Moe and Jack (NYSE:PBY) representing almost 19% of the company’s outstanding shares. In April, GAMCO announced that it was planning to nominate five candidates for the $629.76 million auto-supplies and services retailer’s board. The list included former Bear Stearns executive Bruce Lisman, Philip T. Blazek, F. Jack Liebau Jr., Matthew Goldfarb and Glenn J. Angiolillo. In order to avoid a proxy fight at its annual meeting in July, the company has agreed to add three new independent directors to its board. Moreover, Pep Boys-Manny Moe and Jack (NYSE:PBY) also recently named Scott Sider, the group President of Hertz’s Americas division, as its new CEO. Low tire prices hit the company hard last year and it went through a transition phase in the fourth quarter. So far this year, Pep Boys-Manny Moe and Jack (NYSE:PBY)’s stock has accelerated by 19.55%. Steven Boyd’s Armistice Capital has the third-largest stake in the company among the investors we track, following GAMCO and Glenhill.
Let’s briefly look at Glenhill’s other top picks. The fund boosted its holding in Sinclair Broadcast Group Inc (NASDAQ:SBGI) by 4% during the first quarter to 2.59 million shares valued at $81.48 million. The stake represented 3.72% of the $2.8 billion television broadcasting company’s outstanding shares and 6.42% of the fund’s portfolio value. While the TV broadcasting industry has risen by about 2.7% year-to-date, Sinclair Broadcast Group Inc (NASDAQ:SBGI)’s stock has outperformed its peers, appreciating by 7.5% during the same period. David Amy, the company’s COO has been proclaiming Sinclair an undervalued stock in an undervalued industry. Given that the company is the country’s largest local broadcaster, it is expecting an even larger windfall from the upcoming political season than the last one, which contributed $258 million to its top line. Among the funds that we track, Richard Barrera‘s Roystone Capital Partners is the largest stockholder of Sinclair Broadcast Group Inc (NASDAQ:SBGI) holding 4.35 million shares valued at $136.64 million.
During the first three months of the year, Glenhill added some 454,300 shares of Air Products & Chemicals, Inc. (NYSE:APD) to its portfolio, taking the total stake to 498,400 shares valued at $75.40 million. The fund has held a position in the company since the first quarter of 2014. Over the past year, Air Products & Chemicals, Inc. (NYSE:APD)’s stock has risen by more than 20%. The hedge fund interest in the company, among those that we track, has increased slightly over the last quarter as 83 firms had an aggregate investment of $9.93 billion in the company at the end of March, as compared to 82 funds with $8.92 billion invested at the end of the previous quarter. Activist investor Bill Ackman‘s Pershing Square is the largest stockholder among them, owning some 20.55 million shares valued at $3.11 billion.
Disclosure: None
