The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Aramark (NYSE:ARMK).
Aramark (NYSE:ARMK) investors should pay attention to a decrease in hedge fund sentiment lately. Aramark (NYSE:ARMK) was in 36 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 53. Our calculations also showed that ARMK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At the moment there are a large number of indicators market participants can use to grade stocks. Two of the less known indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outpace the market by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Clint Carlson of Carlson Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Keeping this in mind we’re going to take a glance at the key hedge fund action surrounding Aramark (NYSE:ARMK).
Do Hedge Funds Think ARMK Is A Good Stock To Buy Now?
At Q2’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in ARMK a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Farallon Capital, holds the number one position in Aramark (NYSE:ARMK). Farallon Capital has a $454.9 million position in the stock, comprising 2% of its 13F portfolio. The second most bullish fund manager is Mantle Ridge LP, managed by Paul Hilal, which holds a $100.8 million position; 100% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions encompass Michael Lowenstein’s Kensico Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and George Soros’s Soros Fund Management. In terms of the portfolio weights assigned to each position Mantle Ridge LP allocated the biggest weight to Aramark (NYSE:ARMK), around 100% of its 13F portfolio. 11 Capital Partners is also relatively very bullish on the stock, setting aside 6.56 percent of its 13F equity portfolio to ARMK.
Since Aramark (NYSE:ARMK) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies who were dropping their full holdings in the second quarter. Intriguingly, Alex Duran and Scott Hendrickson’s Permian Investment Partners said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, totaling an estimated $15 million in stock. Alan Fournier’s fund, Pennant Capital Management, also said goodbye to its stock, about $7.2 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds in the second quarter.
Let’s also examine hedge fund activity in other stocks similar to Aramark (NYSE:ARMK). We will take a look at Canopy Growth Corporation (NASDAQ:CGC), Cricut, Inc. (NASDAQ:CRCT), Assurant, Inc. (NYSE:AIZ), The Western Union Company (NYSE:WU), Guidewire Software Inc (NYSE:GWRE), Aspen Technology, Inc. (NASDAQ:AZPN), and Store Capital Corporation (NYSE:STOR). This group of stocks’ market values are similar to ARMK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CGC | 16 | 171734 | 4 |
| CRCT | 13 | 241275 | 1 |
| AIZ | 26 | 945271 | -1 |
| WU | 31 | 369544 | 3 |
| GWRE | 27 | 1843941 | -6 |
| AZPN | 23 | 665739 | -9 |
| STOR | 13 | 899083 | 0 |
| Average | 21.3 | 733798 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $734 million. That figure was $1125 million in ARMK’s case. The Western Union Company (NYSE:WU) is the most popular stock in this table. On the other hand Cricut, Inc. (NASDAQ:CRCT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Aramark (NYSE:ARMK) is more popular among hedge funds. Our overall hedge fund sentiment score for ARMK 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Unfortunately ARMK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ARMK were disappointed as the stock returned -1% since the end of the second quarter (through 10/11) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
