Hedge Funds Have Never Been This Bullish On Pentair plc (PNR)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Pentair plc (NYSE:PNR) based on that data.

Pentair plc (NYSE:PNR) shareholders have witnessed an increase in hedge fund sentiment lately. PNR was in 29 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with PNR holdings at the end of the previous quarter. Our calculations also showed that PNR 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 58 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.

Dmitry Balyasny of Balyasny Asset 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 as well as this tiny lithium play. 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. Keeping this in mind we’re going to view the latest hedge fund action regarding Pentair plc (NYSE:PNR).

How are hedge funds trading Pentair plc (NYSE:PNR)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in PNR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the biggest position in Pentair plc (NYSE:PNR). Impax Asset Management has a $247.1 million position in the stock, comprising 3.3% of its 13F portfolio. Coming in second is Dmitry Balyasny of Balyasny Asset Management, with a $31.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to Pentair plc (NYSE:PNR), around 3.29% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, dishing out 1.32 percent of its 13F equity portfolio to PNR.

As one would reasonably expect, key hedge funds have jumped into Pentair plc (NYSE:PNR) headfirst. Renaissance Technologies, created the largest position in Pentair plc (NYSE:PNR). Renaissance Technologies had $2.1 million invested in the company at the end of the quarter. Clint Murray’s Lodge Hill Capital also made a $2.1 million investment in the stock during the quarter. The following funds were also among the new PNR investors: Jeffrey Moskowitz’s Harvey Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Sander Gerber’s Hudson Bay Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pentair plc (NYSE:PNR) but similarly valued. These stocks are Morningstar, Inc. (NASDAQ:MORN), Kemper Corporation (NYSE:KMPR), Levi Strauss & Co. (NYSE:LEVI), and Ralph Lauren Corporation (NYSE:RL). All of these stocks’ market caps match PNR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $391 million in PNR’s case. Ralph Lauren Corporation (NYSE:RL) is the most popular stock in this table. On the other hand Levi Strauss & Co. (NYSE:LEVI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Pentair plc (NYSE:PNR) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on PNR as the stock returned 32.3% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.