Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Pure Storage, Inc. (NYSE:PSTG) in this article.
Is Pure Storage, Inc. (NYSE:PSTG) a buy, sell, or hold? Hedge funds are getting more optimistic. The number of bullish hedge fund bets rose by 2 lately. Our calculations also showed that PSTG isn’t among the 30 most popular stocks among hedge funds (view the video below). PSTG was in 23 hedge funds’ portfolios at the end of June. There were 21 hedge funds in our database with PSTG positions at the end of the previous quarter.
Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the latest hedge fund action encompassing Pure Storage, Inc. (NYSE:PSTG).
Hedge fund activity in Pure Storage, Inc. (NYSE:PSTG)
At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in PSTG a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Pure Storage, Inc. (NYSE:PSTG) was held by Eminence Capital, which reported holding $164.8 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $118.4 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and Polar Capital.
Now, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable call position in Pure Storage, Inc. (NYSE:PSTG). Balyasny Asset Management had $7.6 million invested in the company at the end of the quarter. Sahm Adrangi’s Kerrisdale Capital also initiated a $4.6 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Noam Gottesman’s GLG Partners, and Ahmet Okumus’s Okumus Fund Management.
Let’s also examine hedge fund activity in other stocks similar to Pure Storage, Inc. (NYSE:PSTG). We will take a look at Lazard Ltd (NYSE:LAZ), RLI Corp. (NYSE:RLI), EQT Corporation (NYSE:EQT), and ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). This group of stocks’ market valuations resemble PSTG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAZ | 16 | 589512 | 0 |
| RLI | 15 | 172039 | 2 |
| EQT | 35 | 873071 | -1 |
| ACAD | 21 | 1345657 | 1 |
| Average | 21.75 | 745070 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $745 million. That figure was $562 million in PSTG’s case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 15 bullish hedge fund positions. Pure Storage, Inc. (NYSE:PSTG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on PSTG as the stock returned 10.9% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
