Hedge Funds Are Piling Into Patrick Industries, Inc. (PATK)

In this article we will check out the progression of hedge fund sentiment towards Patrick Industries, Inc. (NASDAQ:PATK) 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.

Patrick Industries, Inc. (NASDAQ:PATK) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 24. PATK shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 14 hedge funds in our database with PATK holdings at the end of March. Our calculations also showed that PATK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jeffrey Gendell of Tontine Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the key hedge fund action encompassing Patrick Industries, Inc. (NASDAQ:PATK).

Do Hedge Funds Think PATK Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 43% from the first quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in PATK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Patrick Industries, Inc. (NASDAQ:PATK) was held by Royce & Associates, which reported holding $19.4 million worth of stock at the end of June. It was followed by Guardian Point Capital with a $14.6 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Tontine Asset Management. In terms of the portfolio weights assigned to each position Guardian Point Capital allocated the biggest weight to Patrick Industries, Inc. (NASDAQ:PATK), around 3.31% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 1.23 percent of its 13F equity portfolio to PATK.

Consequently, key money managers have jumped into Patrick Industries, Inc. (NASDAQ:PATK) headfirst. Millennium Management, managed by Israel Englander, created the biggest position in Patrick Industries, Inc. (NASDAQ:PATK). Millennium Management had $7.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.4 million position during the quarter. The following funds were also among the new PATK investors: D. E. Shaw’s D E Shaw, Gregg Moskowitz’s Interval Partners, and Gregg Moskowitz’s Interval Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Patrick Industries, Inc. (NASDAQ:PATK) but similarly valued. We will take a look at Amarin Corporation plc (NASDAQ:AMRN), Blink Charging Co. (NASDAQ:BLNK), Air Transport Services Group Inc. (NASDAQ:ATSG), Sangamo Therapeutics, Inc. (NASDAQ:SGMO), Guess’, Inc. (NYSE:GES), Cardiovascular Systems Inc (NASDAQ:CSII), and M/I Homes Inc (NYSE:MHO). All of these stocks’ market caps are closest to PATK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $86 million in PATK’s case. Guess’, Inc. (NYSE:GES) is the most popular stock in this table. On the other hand Blink Charging Co. (NASDAQ:BLNK) is the least popular one with only 7 bullish hedge fund positions. Patrick Industries, Inc. (NASDAQ:PATK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PATK is 71.1. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on PATK as the stock returned 11% since the end of Q2 (through 10/22) 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.