Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Perrigo Company plc Ordinary Shares (NASDAQ:PRGO).
Perrigo Company plc Ordinary Shares (NASDAQ:PRGO) was in 30 hedge funds’ portfolios at the end of September. PRGO has seen an increase in support from the world’s most elite money managers in recent months. There were 28 hedge funds in our database with PRGO holdings at the end of the previous quarter. At the end of this article we will also compare PRGO to other stocks including Fidelity National Financial Inc (NYSE:FNF), CMS Energy Corporation (NYSE:CMS), and Fastenal Company (NASDAQ:FAST) to get a better sense of its popularity.
Follow Perrigo Co (Old Filings) (NYSE:PRGO)
Follow Perrigo Co (Old Filings) (NYSE:PRGO)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, let’s go over the new action encompassing Perrigo Company plc Ordinary Shares (NASDAQ:PRGO).
Hedge fund activity in Perrigo Company plc Ordinary Shares (NASDAQ:PRGO)
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 7% from the second quarter of 2016. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the largest position in Perrigo Company plc Ordinary Shares (NASDAQ:PRGO), worth close to $544.3 million, comprising 14.8% of its total 13F portfolio. Coming in second is Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, which holds a $279.1 million position; 4.9% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism encompass Israel Englander’s Millennium Management, and Stephen DuBois’ Camber Capital Management.
As aggregate interest increased, key money managers were breaking ground themselves. Starboard Value LP established the most valuable position in Perrigo Company plc Ordinary Shares (NASDAQ:PRGO). Malcolm Fairbairn’s Ascend Capital also initiated a $78.9 million position during the quarter. The other funds with new positions in the stock are Anand Parekh’s Alyeska Investment Group, Jim Simons’ Renaissance Technologies, and Arthur B Cohen and Joseph Healey’s Healthcor Management LP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Perrigo Company plc Ordinary Shares (NASDAQ:PRGO) but similarly valued. These stocks are Fidelity National Financial Inc (NYSE:FNF), CMS Energy Corporation (NYSE:CMS), Fastenal Company (NASDAQ:FAST), and MGM Resorts International (NYSE:MGM). This group of stocks’ market valuations are closest to PRGO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FNF | 37 | 1124880 | -2 |
| CMS | 19 | 395362 | 1 |
| FAST | 23 | 624673 | -1 |
| MGM | 53 | 2300675 | -6 |
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1.11 billion. That figure was $1.62 billion in PRGO’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 19 bullish hedge fund positions. Perrigo Company plc Ordinary Shares (NASDAQ:PRGO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MGM might be a better candidate to consider a long position.
Disclosure: None
