Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. After several tireless days we have finished crunching the numbers from nearly 835 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards PTC Inc (NASDAQ:PTC).
PTC Inc (NASDAQ:PTC) investors should be aware of an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that PTC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To most shareholders, hedge funds are assumed to be unimportant, outdated financial tools of the past. While there are greater than 8000 funds in operation at the moment, We hone in on the top tier of this group, about 850 funds. These money managers preside over the lion’s share of all hedge funds’ total asset base, and by monitoring their inimitable equity investments, Insider Monkey has unearthed many investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Michael Lowenstein of Kensico Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the new hedge fund action regarding PTC Inc (NASDAQ:PTC).
What does smart money think about PTC Inc (NASDAQ:PTC)?
At the end of the fourth quarter, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PTC over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, 40 North Management held the most valuable stake in PTC Inc (NASDAQ:PTC), which was worth $219.9 million at the end of the third quarter. On the second spot was Select Equity Group which amassed $195.4 million worth of shares. Praesidium Investment Management Company, Impax Asset Management, and Kensico Capital 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 40 North Management allocated the biggest weight to PTC Inc (NASDAQ:PTC), around 15.52% of its 13F portfolio. Praesidium Investment Management Company is also relatively very bullish on the stock, designating 11.55 percent of its 13F equity portfolio to PTC.
As industrywide interest jumped, some big names have been driving this bullishness. Renaissance Technologies, founded by Jim Simons, created the most outsized position in PTC Inc (NASDAQ:PTC). Renaissance Technologies had $25.2 million invested in the company at the end of the quarter. Jinghua Yan’s TwinBeech Capital also made a $1.5 million investment in the stock during the quarter. The following funds were also among the new PTC investors: John Murphy’s Levin Easterly Partners, Qing Li’s Sciencast Management, and Philippe Laffont’s Coatue Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PTC Inc (NASDAQ:PTC) but similarly valued. We will take a look at Zendesk Inc (NYSE:ZEN), Sensata Technologies Holding N.V. (NYSE:ST), News Corp (NASDAQ:NWS), and Coty Inc (NYSE:COTY). All of these stocks’ market caps are closest to PTC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZEN | 61 | 1843205 | 14 |
| ST | 23 | 1309456 | 0 |
| NWS | 7 | 31884 | -5 |
| COTY | 29 | 346957 | 4 |
| Average | 30 | 882876 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $883 million. That figure was $1101 million in PTC’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 7 bullish hedge fund positions. PTC Inc (NASDAQ:PTC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately PTC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PTC were disappointed as the stock returned -29.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
