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. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards Perrigo Co Plc (NASDAQ:PRGO).
Perrigo Co Plc (NASDAQ:PRGO) shareholders have witnessed a decrease in hedge fund sentiment of late. Perrigo Co Plc (NASDAQ:PRGO) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistic is 63. There were 33 hedge funds in our database with PRGO holdings at the end of March. Our calculations also showed that PRGO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Robert Atchinson of Adage Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. Now we’re going to take a look at the recent hedge fund action surrounding Perrigo Co Plc (NASDAQ:PRGO).
Do Hedge Funds Think PRGO Is A Good Stock To Buy Now?
At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PRGO over the last 24 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Perrigo Co Plc (NASDAQ:PRGO) was held by Point72 Asset Management, which reported holding $116.5 million worth of stock at the end of June. It was followed by Camber Capital Management with a $114.6 million position. Other investors bullish on the company included Alyeska Investment Group, Arrowstreet Capital, and Empyrean Capital Partners. In terms of the portfolio weights assigned to each position Camber Capital Management allocated the biggest weight to Perrigo Co Plc (NASDAQ:PRGO), around 3.86% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 1.35 percent of its 13F equity portfolio to PRGO.
Due to the fact that Perrigo Co Plc (NASDAQ:PRGO) has faced declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of money managers who were dropping their full holdings in the second quarter. It’s worth mentioning that Alec Litowitz and Ross Laser’s Magnetar Capital cut the largest investment of the 750 funds followed by Insider Monkey, valued at about $5.5 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund dumped about $1.7 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 5 funds in the second quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Perrigo Co Plc (NASDAQ:PRGO) but similarly valued. These stocks are Varonis Systems Inc (NASDAQ:VRNS), Penske Automotive Group, Inc. (NYSE:PAG), Tandem Diabetes Care Inc (NASDAQ:TNDM), Landstar System, Inc. (NASDAQ:LSTR), Ingredion Incorporated (NYSE:INGR), CDK Global Inc (NASDAQ:CDK), and Popular Inc (NASDAQ:BPOP). This group of stocks’ market values are similar to PRGO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRNS | 24 | 336746 | -8 |
| PAG | 19 | 188147 | 7 |
| TNDM | 32 | 352984 | 7 |
| LSTR | 16 | 157149 | 1 |
| INGR | 21 | 383586 | -4 |
| CDK | 24 | 225691 | 6 |
| BPOP | 33 | 840477 | -1 |
| Average | 24.1 | 354969 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $355 million. That figure was $457 million in PRGO’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand Landstar System, Inc. (NASDAQ:LSTR) is the least popular one with only 16 bullish hedge fund positions. Perrigo Co Plc (NASDAQ:PRGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRGO is 48.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately PRGO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PRGO were disappointed as the stock returned -1.9% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Perrigo Co Plc (NYSE:PRGO)
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Disclosure: None. This article was originally published at Insider Monkey.
