With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Primo Water Corporation (NYSE:PRMW).
Is Primo Water Corporation (NYSE:PRMW) undervalued? Money managers were becoming hopeful. The number of bullish hedge fund bets moved up by 7 recently. Primo Water Corporation (NYSE:PRMW) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that PRMW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 24 hedge funds in our database with PRMW positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a peek at the recent hedge fund action encompassing Primo Water Corporation (NYSE:PRMW).
Kevin Oram of Praesidium Investment Management Company
Do Hedge Funds Think PRMW Is A Good Stock To Buy Now?
At third quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in PRMW over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Nitorum Capital was the largest shareholder of Primo Water Corporation (NYSE:PRMW), with a stake worth $134.7 million reported as of the end of September. Trailing Nitorum Capital was Praesidium Investment Management Company, which amassed a stake valued at $110.2 million. 40 North Management, P2 Capital Partners, and StackLine Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to Primo Water Corporation (NYSE:PRMW), around 15.61% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, setting aside 6.41 percent of its 13F equity portfolio to PRMW.
As one would reasonably expect, specific money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Primo Water Corporation (NYSE:PRMW). ExodusPoint Capital had $8.1 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also initiated a $4.1 million position during the quarter. The other funds with brand new PRMW positions are Andrew Rechtschaffen’s AREX Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks similar to Primo Water Corporation (NYSE:PRMW). We will take a look at Myriad Genetics, Inc. (NASDAQ:MYGN), Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE:VLRS), Independent Bank Corp (NASDAQ:INDB), Rush Enterprises, Inc. (NASDAQ:RUSHA), Triumph Bancorp Inc (NASDAQ:TBK), Black Stone Minerals LP (NYSE:BSM), and Celldex Therapeutics, Inc. (NASDAQ:CLDX). All of these stocks’ market caps are similar to PRMW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MYGN | 17 | 379952 | 3 |
| VLRS | 13 | 341698 | -3 |
| INDB | 12 | 36081 | -1 |
| RUSHA | 19 | 87772 | 2 |
| TBK | 16 | 350578 | -3 |
| BSM | 7 | 31784 | 1 |
| CLDX | 27 | 714970 | 5 |
| Average | 15.9 | 277548 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $278 million. That figure was $617 million in PRMW’s case. Celldex Therapeutics, Inc. (NASDAQ:CLDX) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Primo Water Corporation (NYSE:PRMW) is more popular among hedge funds. Our overall hedge fund sentiment score for PRMW is 85.8. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately PRMW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PRMW were disappointed as the stock returned 6.1% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Primo Water Corp (NYSE:PRMW)
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Disclosure: None. This article was originally published at Insider Monkey.
