Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending on October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Pampa Energia S.A. (ADR) (NYSE:PAM).
Pampa Energia S.A. (ADR) has seen an increase in hedge fund sentiment recently. PAM was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 9 hedge funds in our database with PAM holdings 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 Altisource Residential Corp (NYSE:RESI), Standard Motor Products, Inc. (NYSE:SMP), and Ply Gem Holdings Inc (NYSE:PGEM) to gather more data points.
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If you’d ask most stock holders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are more than 8000 funds in operation at the moment, We look at the top tier of this club, around 700 funds. Most estimates calculate that this group of people have their hands on most of all hedge funds’ total asset base, and by tracking their best investments, Insider Monkey has figured out a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, let’s take a look at the new action encompassing Pampa Energia S.A. (ADR) (NYSE:PAM).
What have hedge funds been doing with Pampa Energia S.A. (ADR) (NYSE:PAM)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Point State Capital, managed by Zach Schreiber, holds the number one position in Pampa Energia S.A. (ADR) (NYSE:PAM). Point State Capital has a $31.4 million position in the stock, comprising 0.9% of its 13F portfolio. The second most bullish fund manager is Alan Howard of Brevan Howard, with a $23.4 million position; the fund has 11.8% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include Kevin D. Eng’s Columbus Hill Capital Management, and Edmond M. Safra’s EMS Capital.
As aggregate interest increased, some big names were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, initiated the most valuable position in Pampa Energia S.A. (ADR) (NYSE:PAM). Driehaus Capital had $6.2 million invested in the company at the end of the quarter. Michael Novogratz’s Fortress Investment Group also initiated a $0.8 million position during the quarter.
Let’s go over hedge fund activity in other stocks similar to Pampa Energia S.A. (ADR) (NYSE:PAM). We will take a look at Altisource Residential Corp (NYSE:RESI), Standard Motor Products, Inc. (NYSE:SMP), Ply Gem Holdings Inc (NYSE:PGEM), and Western Digital Corp. (NASDAQ:WD). All of these stocks’ market caps match PAM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RESI | 13 | 125143 | -4 |
| SMP | 6 | 136162 | -2 |
| PGEM | 20 | 103687 | 4 |
| WD | 16 | 36203 | -2 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $92 million in PAM’s case. Ply Gem Holdings Inc (NYSE:PGEM) is the most popular stock in this table. On the other hand, Standard Motor Products, Inc. (NYSE:SMP) is the least popular one with only 6 bullish hedge fund positions. Although Pampa Energia S.A. (ADR) (NYSE:PAM), with 10 bullish hedge fund positions, is not the least popular stock in this group it still has not attracted much attention from investors. This is a slightly negative signal, and we’d rather spend our time researching stocks that hedge funds are collectively most fond of, such as PGEM, in this particular group.
