Hedge Funds Have Never Been This Bullish On Pool Corporation (POOL)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Pool Corporation (NASDAQ:POOL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Pool Corporation (NASDAQ:POOL) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Pool Corporation (NASDAQ:POOL) was in 41 hedge funds’ portfolios at the end of March. The all time high for this statistic was 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that POOL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Ray Dalio of Bridgewater Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the latest hedge fund action regarding Pool Corporation (NASDAQ:POOL).

Do Hedge Funds Think POOL Is A Good Stock To Buy Now?

At Q1’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the fourth quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in POOL a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

The largest stake in Pool Corporation (NASDAQ:POOL) was held by Select Equity Group, which reported holding $301 million worth of stock at the end of December. It was followed by Echo Street Capital Management with a $94.6 million position. Other investors bullish on the company included Fisher Asset Management, Impax Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Precept Capital Management allocated the biggest weight to Pool Corporation (NASDAQ:POOL), around 2.12% of its 13F portfolio. Aubrey Capital Management is also relatively very bullish on the stock, dishing out 1.61 percent of its 13F equity portfolio to POOL.

Now, key money managers were leading the bulls’ herd. Armistice Capital, managed by Steven Boyd, established the largest position in Pool Corporation (NASDAQ:POOL). Armistice Capital had $12.7 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also made a $9.4 million investment in the stock during the quarter. The following funds were also among the new POOL investors: Matthew Hulsizer’s PEAK6 Capital Management, Michael Cowley’s Sandbar Asset Management, and Blair Baker’s Precept Capital Management.

Let’s now take a look at 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 PulteGroup, Inc. (NYSE:PHM), The J.M. Smucker Company (NYSE:SJM), Whirlpool Corporation (NYSE:WHR), Tata Motors Limited (NYSE:TTM), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Williams-Sonoma, Inc. (NYSE:WSM), and WestRock Company (NYSE:WRK). This group of stocks’ market valuations match POOL’s market valuation.

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As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $810 million. That figure was $1015 million in POOL’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 8 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 overall hedge fund sentiment score for POOL is 87.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on POOL as the stock returned 28.3% since the end of Q1 (through 6/18) 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.