Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze PJT Partners Inc (NYSE:PJT) from the perspective of those successful funds.
PJT Partners Inc (NYSE:PJT) was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. PJT investors should pay attention to a decrease in hedge fund sentiment lately. There were 14 hedge funds in our database with PJT positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Bazaarvoice Inc (NASDAQ:BV), Unisys Corporation (NYSE:UIS), and Kimball International Inc (NASDAQ:KBAL) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a look at the recent action regarding PJT Partners Inc (NYSE:PJT).
Hedge fund activity in PJT Partners Inc (NYSE:PJT)
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PJT over the last 5 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Petry of Sessa Capital holds the most valuable position in PJT Partners Inc (NYSE:PJT). Sessa Capital has a $41.5 million position in the stock, comprising 9.2% of its 13F portfolio. Coming in second is Michael Blitzer of Kingstown Capital Management holding a $27.3 million position; 3% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism encompass Mark Rachesky’s MHR Fund Management, Gunnar Overstrom’s Three Corner Global Investors and Paul Tudor Jones’ Tudor Investment Corp. We should note that Sessa Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that PJT Partners Inc (NYSE:PJT) has sustained bearish sentiment from the smart money, it’s safe to say that there was a specific group of fund managers who sold off their positions entirely last quarter. Interestingly, Josh Goldberg’s G2 Investment Partners Management sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $0.7 million in stock, and D E Shaw was right behind this move, as the fund cut about $0.6 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks similar to PJT Partners Inc (NYSE:PJT). We will take a look at Bazaarvoice Inc (NASDAQ:BV), Unisys Corporation (NYSE:UIS), Kimball International Inc (NASDAQ:KBAL), and LivePerson, Inc. (NASDAQ:LPSN). All of these stocks’ market caps are similar to PJT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BV | 24 | 145630 | 7 |
| UIS | 20 | 71205 | 2 |
| KBAL | 9 | 45248 | 0 |
| LPSN | 14 | 69467 | -4 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $142 million in PJT’s case. Bazaarvoice Inc (NASDAQ:BV) is the most popular stock in this table. On the other hand Kimball International Inc (NASDAQ:KBAL) is the least popular one with only 9 bullish hedge fund positions. PJT Partners Inc (NYSE:PJT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BV might be a better candidate to consider taking a long position in.
Disclosure: None
