In this article we will check out the progression of hedge fund sentiment towards Party City Holdco Inc (NYSE:PRTY) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Party City Holdco Inc (NYSE:PRTY) a buy, sell, or hold? Prominent investors were betting on the stock. The number of bullish hedge fund positions advanced by 1 lately. Party City Holdco Inc (NYSE:PRTY) was in 19 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PRTY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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John Overdeck of Two Sigma Advisors
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Do Hedge Funds Think PRTY Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the fourth quarter of 2020. By comparison, 10 hedge funds held shares or bullish call options in PRTY a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Party City Holdco Inc (NYSE:PRTY) was held by CAS Investment Partners, which reported holding $92.7 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $14.4 million position. Other investors bullish on the company included Two Sigma Advisors, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position CAS Investment Partners allocated the biggest weight to Party City Holdco Inc (NYSE:PRTY), around 4.74% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, designating 1.61 percent of its 13F equity portfolio to PRTY.
As industrywide interest jumped, some big names were leading the bulls’ herd. ExodusPoint Capital, managed by Michael Gelband, initiated the most valuable position in Party City Holdco Inc (NYSE:PRTY). ExodusPoint Capital had $1.9 million invested in the company at the end of the quarter. Bruce J. Richards and Louis Hanover’s Marathon Asset Management also made a $0.7 million investment in the stock during the quarter. The other funds with brand new PRTY positions are Jonathan Soros’s JS Capital, Jonathan Dawson’s Southport Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Party City Holdco Inc (NYSE:PRTY). These stocks are The York Water Company (NASDAQ:YORW), Sinovac Biotech Ltd. (NASDAQ:SVA), Ferroglobe PLC (NASDAQ:GSM), Fossil Group Inc (NASDAQ:FOSL), Napco Security Technologies Inc (NASDAQ:NSSC), MeiraGTx Holdings plc (NASDAQ:MGTX), and Arch Resources, Inc. (NYSE:ARCH). This group of stocks’ market values resemble PRTY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YORW | 4 | 11798 | -2 |
| SVA | 3 | 111710 | 0 |
| GSM | 16 | 92914 | 2 |
| FOSL | 16 | 99756 | 0 |
| NSSC | 4 | 6359 | -2 |
| MGTX | 13 | 227177 | -3 |
| ARCH | 25 | 162566 | 1 |
| Average | 11.6 | 101754 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $144 million in PRTY’s case. Arch Resources, Inc. (NYSE:ARCH) is the most popular stock in this table. On the other hand Sinovac Biotech Ltd. (NASDAQ:SVA) is the least popular one with only 3 bullish hedge fund positions. Party City Holdco Inc (NYSE:PRTY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRTY is 72.4. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on PRTY as the stock returned 42.4% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
