Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 12.1% in 2019 (through May 30th). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of 18.7% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like PJT Partners Inc (NYSE:PJT).
PJT Partners Inc (NYSE:PJT) has experienced an increase in support from the world’s most elite money managers in recent months. PJT was in 19 hedge funds’ portfolios at the end of March. There were 18 hedge funds in our database with PJT holdings at the end of the previous quarter. Our calculations also showed that pjt isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most market participants, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation today, Our experts hone in on the bigwigs of this club, approximately 750 funds. Most estimates calculate that this group of people shepherd the majority of the smart money’s total capital, and by tailing their finest picks, Insider Monkey has determined various investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to go over the key hedge fund action encompassing PJT Partners Inc (NYSE:PJT).
How have hedgies been trading PJT Partners Inc (NYSE:PJT)?
At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in PJT a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Corsair Capital LLC was the largest shareholder of PJT Partners Inc (NYSE:PJT), with a stake worth $54.8 million reported as of the end of March. Trailing Corsair Capital LLC was MHR Fund Management, which amassed a stake valued at $36.8 million. Millennium Management, Sessa Capital, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, some big names have jumped into PJT Partners Inc (NYSE:PJT) headfirst. HBK Investments, managed by David Costen Haley, created the largest position in PJT Partners Inc (NYSE:PJT). HBK Investments had $0.5 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.4 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to PJT Partners Inc (NYSE:PJT). We will take a look at Triumph Group Inc (NYSE:TGI), Granite Point Mortgage Trust Inc. (NYSE:GPMT), Berry Petroleum Corporation (NASDAQ:BRY), and Trueblue Inc (NYSE:TBI). This group of stocks’ market caps resemble PJT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TGI | 12 | 44604 | 4 |
| GPMT | 12 | 43820 | 6 |
| BRY | 16 | 166506 | 2 |
| TBI | 17 | 78413 | 2 |
| Average | 14.25 | 83336 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $161 million in PJT’s case. Trueblue Inc (NYSE:TBI) is the most popular stock in this table. On the other hand Triumph Group Inc (NYSE:TGI) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks PJT Partners Inc (NYSE:PJT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately PJT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PJT were disappointed as the stock returned -8.5% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
