Hedge Funds Are Buying Patterson Companies, Inc. (PDCO)

Is Patterson Companies, Inc. (NASDAQ:PDCO) an exceptional investment today? The smart money is in a bullish mood. The number of bullish hedge fund positions moved up by 8 lately.

In the 21st century investor’s toolkit, there are a multitude of gauges investors can use to watch the equity markets. Two of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top fund managers can outpace the S&P 500 by a significant margin (see just how much).

Just as important, optimistic insider trading sentiment is another way to parse down the marketplace. Obviously, there are lots of incentives for an executive to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this strategy if “monkeys” know what to do (learn more here).

With all of this in mind, it’s important to take a look at the latest action encompassing Patterson Companies, Inc. (NASDAQ:PDCO).

Hedge fund activity in Patterson Companies, Inc. (NASDAQ:PDCO)

In preparation for this quarter, a total of 22 of the hedge funds we track were bullish in this stock, a change of 57% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly.

According to our comprehensive database, Donald Yacktman’s Yacktman Asset Management had the largest position in Patterson Companies, Inc. (NASDAQ:PDCO), worth close to $116 million, accounting for 0.6% of its total 13F portfolio. On Yacktman Asset Management’s heels is GAMCO Investors, managed by Mario Gabelli, which held a $59.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, Clint Carlson’s Carlson Capital and David Harding’s Winton Capital Management.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Carlson Capital, managed by Clint Carlson, established the largest position in Patterson Companies, Inc. (NASDAQ:PDCO). Carlson Capital had 13.1 million invested in the company at the end of the quarter. SAC Subsidiary’s CR Intrinsic Investors also made a $4.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Christopher Medlock James’s Partner Fund Management, Matthew Tewksbury’s Stevens Capital Management, and D. E. Shaw’s D E Shaw.

How have insiders been trading Patterson Companies, Inc. (NASDAQ:PDCO)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest half-year time period, Patterson Companies, Inc. (NASDAQ:PDCO) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Patterson Companies, Inc. (NASDAQ:PDCO). These stocks are Chindex International, Inc. (NASDAQ:CHDX), MWI Veterinary Supply, Inc. (NASDAQ:MWIV), Henry Schein, Inc. (NASDAQ:HSIC), and Owens & Minor, Inc. (NYSE:OMI). This group of stocks are the members of the medical equipment wholesale industry and their market caps are similar to PDCO’s market cap.

With the returns shown by our research, retail investors must always watch hedge fund and insider trading sentiment, and Patterson Companies, Inc. (NASDAQ:PDCO) is an important part of this process.

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