The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Premier Inc (NASDAQ:PINC) based on those filings.
Hedge fund interest in Premier Inc (NASDAQ:PINC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PINC to other stocks including Xenia Hotels & Resorts Inc (NYSE:XHR), Seritage Growth Properties (NYSE:SRG), and H.B. Fuller Company (NYSE:FUL) to get a better sense of its popularity. Our calculations also showed that PINC isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 review the recent hedge fund action regarding Premier Inc (NASDAQ:PINC).
How have hedgies been trading Premier Inc (NASDAQ:PINC)?
At Q2’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in PINC over the last 16 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Premier Inc (NASDAQ:PINC), with a stake worth $123.8 million reported as of the end of March. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $16.1 million. East Side Capital (RR Partners), D E Shaw, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Since Premier Inc (NASDAQ:PINC) has witnessed bearish sentiment from the smart money, logic holds that there were a few money managers that elected to cut their entire stakes heading into Q3. Interestingly, Israel Englander’s Millennium Management said goodbye to the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $1.7 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $0.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Premier Inc (NASDAQ:PINC) but similarly valued. We will take a look at Xenia Hotels & Resorts Inc (NYSE:XHR), Seritage Growth Properties (NYSE:SRG), H.B. Fuller Company (NYSE:FUL), and GSX Techedu Inc. (NYSE:GSX). This group of stocks’ market caps match PINC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XHR | 12 | 37569 | 3 |
| SRG | 15 | 460506 | -2 |
| FUL | 12 | 126249 | -6 |
| GSX | 2 | 12848 | 2 |
| Average | 10.25 | 159293 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $198 million in PINC’s case. Seritage Growth Properties (NYSE:SRG) is the most popular stock in this table. On the other hand GSX Techedu Inc. (NYSE:GSX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Premier Inc (NASDAQ:PINC) is more popular among hedge funds. 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. Unfortunately PINC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on PINC were disappointed as the stock returned -26.1% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
