We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Pool Corporation (NASDAQ:POOL) in this article.
Pool Corporation (NASDAQ:POOL) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2019. POOL has experienced a decrease in hedge fund sentiment in recent months. There were 30 hedge funds in our database with POOL positions at the end of the previous quarter. Our calculations also showed that POOL 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To most stock holders, hedge funds are seen as unimportant, outdated financial tools of the past. While there are greater than 8000 funds trading today, We choose to focus on the bigwigs of this group, around 850 funds. These money managers manage the majority of the smart money’s total asset base, and by shadowing their top equity investments, Insider Monkey has unearthed a number of investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy outrun 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 .
Richard Chilton of Chilton Investment Company
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. With all of this in mind let’s analyze the latest hedge fund action encompassing Pool Corporation (NASDAQ:POOL).
How have hedgies been trading Pool Corporation (NASDAQ:POOL)?
At Q4’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in POOL a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of 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, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Pool Corporation (NASDAQ:POOL). Fisher Asset Management has a $85 million position in the stock, comprising 0.1% of its 13F portfolio. On Fisher Asset Management’s heels is Impax Asset Management, managed by Ian Simm, which holds a $77.4 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Ken Griffin’s Citadel Investment Group, Noam Gottesman’s GLG Partners and Richard Chilton’s Chilton Investment Company. In terms of the portfolio weights assigned to each position Aubrey Capital Management allocated the biggest weight to Pool Corporation (NASDAQ:POOL), around 2.25% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, setting aside 1.67 percent of its 13F equity portfolio to POOL.
Because Pool Corporation (NASDAQ:POOL) has faced falling interest from the smart money, we can see that there were a few fund managers who sold off their positions entirely in the third quarter. It’s worth mentioning that Renaissance Technologies sold off the largest stake of all the hedgies followed by Insider Monkey, valued at close to $9.6 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $7.1 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pool Corporation (NASDAQ:POOL) but similarly valued. We will take a look at The Toro Company (NYSE:TTC), F5 Networks, Inc. (NASDAQ:FFIV), Masimo Corporation (NASDAQ:MASI), and Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ). This group of stocks’ market caps resemble POOL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTC | 23 | 773670 | 2 |
| FFIV | 29 | 1184887 | 4 |
| MASI | 30 | 171518 | 1 |
| JAZZ | 25 | 1192685 | -2 |
| Average | 26.75 | 830690 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $831 million. That figure was $445 million in POOL’s case. Masimo Corporation (NASDAQ:MASI) is the most popular stock in this table. On the other hand The Toro Company (NYSE:TTC) is the least popular one with only 23 bullish hedge fund positions. Pool Corporation (NASDAQ:POOL) 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 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 still beat the market by 3.2 percentage points. Hedge funds were also right about betting on POOL as the stock returned -19% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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.
