We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like PQ Group Holdings Inc. (NYSE:PQG).
PQ Group Holdings Inc. (NYSE:PQG) investors should be aware of an increase in activity from the world’s largest hedge funds of late. Our calculations also showed that PQG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are seen as unimportant, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts look at the leaders of this group, around 750 funds. It is estimated that this group of investors handle bulk of the hedge fund industry’s total capital, and by following their highest performing picks, Insider Monkey has brought to light a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the new hedge fund action encompassing PQ Group Holdings Inc. (NYSE:PQG).
What does smart money think about PQ Group Holdings Inc. (NYSE:PQG)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in PQG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PQ Group Holdings Inc. (NYSE:PQG) was held by Zimmer Partners, which reported holding $51.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $2.5 million position. Other investors bullish on the company included Citadel Investment Group, Winton Capital Management, and Weld Capital Management. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to PQ Group Holdings Inc. (NYSE:PQG), around 0.56% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, dishing out 0.07 percent of its 13F equity portfolio to PQG.
As one would reasonably expect, key hedge funds have jumped into PQ Group Holdings Inc. (NYSE:PQG) headfirst. Weld Capital Management, managed by Minhua Zhang, initiated the biggest position in PQ Group Holdings Inc. (NYSE:PQG). Weld Capital Management had $0.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also made a $0 million investment in the stock during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PQ Group Holdings Inc. (NYSE:PQG) but similarly valued. We will take a look at PriceSmart, Inc. (NASDAQ:PSMT), Northwest Natural Holding Company (NYSE:NWN), Tenable Holdings, Inc. (NASDAQ:TENB), and Cactus, Inc. (NYSE:WHD). This group of stocks’ market valuations are closest to PQG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSMT | 9 | 50814 | -6 |
| NWN | 16 | 63875 | 4 |
| TENB | 18 | 135666 | 1 |
| WHD | 18 | 160038 | -6 |
| Average | 15.25 | 102598 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $56 million in PQG’s case. Tenable Holdings, Inc. (NASDAQ:TENB) is the most popular stock in this table. On the other hand PriceSmart, Inc. (NASDAQ:PSMT) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks PQ Group Holdings Inc. (NYSE:PQG) is even less popular than PSMT. Hedge funds dodged a bullet by taking a bearish stance towards PQG. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately PQG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); PQG investors were disappointed as the stock returned -0.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
