Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the first 6 weeks of the fourth quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Plantronics, Inc. (NYSE:PLT) to find out whether it was one of their high conviction long-term ideas.
Plantronics, Inc. (NYSE:PLT) investors should pay attention to an increase in hedge fund interest recently. Our calculations also showed that PLT isn’t among the 30 most popular stocks among hedge funds.
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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 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.
We’re going to take a gander at the fresh hedge fund action surrounding Plantronics, Inc. (NYSE:PLT).
How have hedgies been trading Plantronics, Inc. (NYSE:PLT)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in PLT heading into this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Plantronics, Inc. (NYSE:PLT) was held by Renaissance Technologies, which reported holding $76.4 million worth of stock at the end of September. It was followed by GLG Partners with a $21.6 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and AQR Capital Management.
As aggregate interest increased, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in Plantronics, Inc. (NYSE:PLT). Marshall Wace LLP had $10.1 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $6.3 million position during the quarter. The other funds with brand new PLT positions are Paul Tudor Jones’s Tudor Investment Corp, Adam Usdan’s Trellus Management Company, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks similar to Plantronics, Inc. (NYSE:PLT). We will take a look at Minerals Technologies Inc (NYSE:MTX), Rowan Companies plc (NYSE:RDC), WD-40 Company (NASDAQ:WDFC), and BBVA Banco Frances S.A. (NYSE:BFR). This group of stocks’ market valuations match PLT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTX | 15 | 170727 | -2 |
| RDC | 31 | 761642 | 5 |
| WDFC | 10 | 154086 | 1 |
| BFR | 7 | 13619 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $275 million. That figure was $184 million in PLT’s case. Rowan Companies plc (NYSE:RDC) is the most popular stock in this table. On the other hand BBVA Banco Frances S.A. (NYSE:BFR) is the least popular one with only 7 bullish hedge fund positions. Plantronics, Inc. (NYSE:PLT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RDC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
