We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of PACCAR Inc (NASDAQ:PCAR) based on that data.
Is PACCAR Inc (NASDAQ:PCAR) ready to rally soon? Money managers are turning bullish. The number of long hedge fund bets rose by 2 lately. Our calculations also showed that PCAR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phill Gross of Adage Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s analyze the recent hedge fund action encompassing PACCAR Inc (NASDAQ:PCAR).
Hedge fund activity in PACCAR Inc (NASDAQ:PCAR)
Heading into the second quarter of 2020, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the fourth quarter of 2019. By comparison, 23 hedge funds held shares or bullish call options in PCAR a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of PACCAR Inc (NASDAQ:PCAR), with a stake worth $139.2 million reported as of the end of September. Trailing Citadel Investment Group was Adage Capital Management, which amassed a stake valued at $66.4 million. AQR Capital Management, Alyeska Investment Group, and Renaissance Technologies 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 Impala Asset Management allocated the biggest weight to PACCAR Inc (NASDAQ:PCAR), around 4.39% of its 13F portfolio. Anchor Bolt Capital is also relatively very bullish on the stock, designating 2.26 percent of its 13F equity portfolio to PCAR.
As industrywide interest jumped, key money managers have been driving this bullishness. Alyeska Investment Group, managed by Anand Parekh, initiated the most outsized position in PACCAR Inc (NASDAQ:PCAR). Alyeska Investment Group had $38.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $23.4 million position during the quarter. The following funds were also among the new PCAR investors: Brandon Haley’s Holocene Advisors, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PACCAR Inc (NASDAQ:PCAR) but similarly valued. We will take a look at Tyson Foods, Inc. (NYSE:TSN), Ball Corporation (NYSE:BLL), CRH PLC (NYSE:CRH), and TE Connectivity Ltd. (NYSE:TEL). This group of stocks’ market values match PCAR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSN | 41 | 906465 | -17 |
| BLL | 41 | 697826 | -3 |
| CRH | 10 | 131812 | 5 |
| TEL | 33 | 1381411 | -11 |
| Average | 31.25 | 779379 | -6.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $779 million. That figure was $486 million in PCAR’s case. Tyson Foods, Inc. (NYSE:TSN) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 10 bullish hedge fund positions. PACCAR Inc (NASDAQ:PCAR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on PCAR as the stock returned 21.4% in Q2 (through the end of May) 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.
