The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Park Aerospace Corp. (NYSE:PKE).
Park Aerospace Corp. (NYSE:PKE) was in 12 hedge funds’ portfolios at the end of September. The all time high for this statistics is 13. PKE has seen an increase in hedge fund sentiment of late. There were 10 hedge funds in our database with PKE positions at the end of the second quarter. Our calculations also showed that PKE isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
William Martin of Raging Capital Management
At Insider Monkey we scour multiple sources to uncover 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 and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to review the recent hedge fund action encompassing Park Aerospace Corp. (NYSE:PKE).
Do Hedge Funds Think PKE Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PKE over the last 21 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the largest position in Park Aerospace Corp. (NYSE:PKE). Renaissance Technologies has a $18 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is GAMCO Investors, led by Mario Gabelli, holding a $8.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of William C. Martin’s Raging Capital Management, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Raging Capital Management allocated the biggest weight to Park Aerospace Corp. (NYSE:PKE), around 6.75% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to PKE.
As aggregate interest increased, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Park Aerospace Corp. (NYSE:PKE). Citadel Investment Group had $1.3 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new PKE position is Ali Motamed’s Invenomic Capital Management.
Let’s go over hedge fund activity in other stocks similar to Park Aerospace Corp. (NYSE:PKE). We will take a look at Entercom Communications Corp. (NYSE:ETM), Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), EMX Royalty Corporation (NYSE:EMX), Old Second Bancorp Inc. (NASDAQ:OSBC), U.S. Silica Holdings Inc (NYSE:SLCA), Fly Leasing Ltd (NYSE:FLY), and Ruhnn Holding Limited (NASDAQ:RUHN). This group of stocks’ market values are similar to PKE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETM | 17 | 13721 | -1 |
| NGVC | 13 | 24830 | 1 |
| EMX | 3 | 9203 | 1 |
| OSBC | 10 | 12116 | -2 |
| SLCA | 16 | 57788 | 0 |
| FLY | 7 | 12567 | -3 |
| RUHN | 3 | 595 | 1 |
| Average | 9.9 | 18689 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $38 million in PKE’s case. Entercom Communications Corp. (NYSE:ETM) is the most popular stock in this table. On the other hand EMX Royalty Corporation (NYSE:EMX) is the least popular one with only 3 bullish hedge fund positions. Park Aerospace Corp. (NYSE:PKE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PKE is 66.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on PKE as the stock returned 28.8% since the end of Q3 (through 12/8) 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.
