Is PPD Stock A Buy or Sell?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards PPD, Inc. (NASDAQ:PPD).

Is PDD stock a buy? PPD, Inc. (NASDAQ:PPD) investors should be aware of a decrease in hedge fund sentiment in recent months. PPD, Inc. (NASDAQ:PPD) was in 29 hedge funds’ portfolios at the end of December. The all time high for this statistic is 33. Our calculations also showed that PPD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Daniel Sundheim of D1 Capital Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let’s review the recent hedge fund action surrounding PPD, Inc. (NASDAQ:PPD).

Do Hedge Funds Think PPD Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PPD over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in PPD, Inc. (NASDAQ:PPD) was held by FPR Partners, which reported holding $218.8 million worth of stock at the end of December. It was followed by D1 Capital Partners with a $102.6 million position. Other investors bullish on the company included Holocene Advisors, Marshall Wace LLP, and Sectoral Asset Management. In terms of the portfolio weights assigned to each position FPR Partners allocated the biggest weight to PPD, Inc. (NASDAQ:PPD), around 6.44% of its 13F portfolio. Steamboat Capital Partners is also relatively very bullish on the stock, earmarking 2.54 percent of its 13F equity portfolio to PPD.

Since PPD, Inc. (NASDAQ:PPD) has witnessed bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their full holdings by the end of the fourth quarter. Intriguingly, Philip Hilal’s Clearfield Capital sold off the largest position of all the hedgies watched by Insider Monkey, totaling an estimated $24.9 million in stock, and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund cut about $11.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the fourth quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PPD, Inc. (NASDAQ:PPD) but similarly valued. These stocks are IPG Photonics Corporation (NASDAQ:IPGP), Sibanye Stillwater Limited (NYSE:SBSW), Fortune Brands Home & Security Inc (NYSE:FBHS), InterContinental Hotels Group PLC (NYSE:IHG), Autohome Inc (NYSE:ATHM), Brookfield Renewable Partners L.P. (NYSE:BEP), and W.R. Berkley Corporation (NYSE:WRB). This group of stocks’ market values resemble PPD’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $405 million. That figure was $704 million in PPD’s case. W.R. Berkley Corporation (NYSE:WRB) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 7 bullish hedge fund positions. PPD, Inc. (NASDAQ:PPD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PPD is 64. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on PPD as the stock returned 12.2% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.