It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in PTC Inc (NASDAQ:PTC).
PTC Inc (NASDAQ:PTC) investors should pay attention to an increase in support from the world’s most elite money managers lately. Our calculations also showed that PTC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are dozens of methods shareholders have at their disposal to appraise their stock investments. Two of the most useful methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outclass the market by a very impressive margin (see the details here).
Michael Lowenstein of Kensico Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the fresh hedge fund action surrounding PTC Inc (NASDAQ:PTC).
How have hedgies been trading PTC Inc (NASDAQ:PTC)?
Heading into the fourth quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PTC over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, 40 North Management was the largest shareholder of PTC Inc (NASDAQ:PTC), with a stake worth $200.2 million reported as of the end of September. Trailing 40 North Management was Select Equity Group, which amassed a stake valued at $123.7 million. Praesidium Investment Management, 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 17.88% of its portfolio. Praesidium Investment Management is also relatively very bullish on the stock, setting aside 7.71 percent of its 13F equity portfolio to PTC.
As aggregate interest increased, specific money managers were breaking ground themselves. Kensico Capital, managed by Michael Lowenstein, initiated the most valuable position in PTC Inc (NASDAQ:PTC). Kensico Capital had $61.7 million invested in the company at the end of the quarter. David Goel and Paul Ferri’s Matrix Capital Management also initiated a $39.7 million position during the quarter. The other funds with brand new PTC positions are Dmitry Balyasny’s Balyasny Asset Management, Larry Foley and Paul Farrell’s Bronson Point Partners, and Mark N. Diker’s Diker Management.
Let’s check out hedge fund activity in other stocks similar to PTC Inc (NASDAQ:PTC). These stocks are Athene Holding Ltd. (NYSE:ATH), A. O. Smith Corporation (NYSE:AOS), The Toro Company (NYSE:TTC), and American Homes 4 Rent (NYSE:AMH). All of these stocks’ market caps match PTC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATH | 39 | 1453694 | 0 |
| AOS | 18 | 330010 | -4 |
| TTC | 19 | 688727 | -5 |
| AMH | 23 | 432164 | -2 |
| Average | 24.75 | 726149 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $726 million. That figure was $809 million in PTC’s case. Athene Holding Ltd. (NYSE:ATH) is the most popular stock in this table. On the other hand A. O. Smith Corporation (NYSE:AOS) is the least popular one with only 18 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on PTC as the stock returned 12.3% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
