Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Premier Inc (NASDAQ:PINC) investors should pay attention to an increase in activity from the world’s largest hedge funds of late. PINC was in 21 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with PINC holdings at the end of the previous quarter. Our calculations also showed that PINC isn’t among the 30 most popular stocks among hedge funds.
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. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the recent hedge fund action regarding Premier Inc (NASDAQ:PINC).
How have hedgies been trading Premier Inc (NASDAQ:PINC)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in PINC at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Premier Inc (NASDAQ:PINC), which was worth $59.1 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $29.3 million worth of shares. Moreover, GLG Partners, Millennium Management, and East Side Capital (RR Partners) were also bullish on Premier Inc (NASDAQ:PINC), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds have jumped into Premier Inc (NASDAQ:PINC) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Premier Inc (NASDAQ:PINC). Arrowstreet Capital had $10.7 million invested in the company at the end of the quarter. Michael Castor’s Sio Capital also made a $6.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Thomas Bailard’s Bailard Inc.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Premier Inc (NASDAQ:PINC) but similarly valued. These stocks are Regenxbio Inc (NASDAQ:RGNX), Avaya Holdings Corp. (NYSE:AVYA), Chart Industries, Inc. (NASDAQ:GTLS), and DiamondRock Hospitality Company (NYSE:DRH). This group of stocks’ market valuations resemble PINC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RGNX | 24 | 418010 | 3 |
| AVYA | 34 | 588061 | 0 |
| GTLS | 18 | 158921 | 2 |
| DRH | 9 | 90417 | -4 |
| Average | 21.25 | 313852 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $314 million. That figure was $214 million in PINC’s case. Avaya Holdings Corp. (NYSE:AVYA) is the most popular stock in this table. On the other hand DiamondRock Hospitality Company (NYSE:DRH) is the least popular one with only 9 bullish hedge fund positions. Premier Inc (NASDAQ:PINC) 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 AVYA might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
