Is PRGO Stock A Buy or Sell?

In this article we will take a look at whether hedge funds think Perrigo Co Plc (NASDAQ:PRGO) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is PRGO stock a buy? The best stock pickers were taking a bullish view. The number of bullish hedge fund positions improved by 2 lately. Perrigo Co Plc (NASDAQ:PRGO) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 63. Our calculations also showed that PRGO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Ric Dillon of Diamond Hill Capital

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 biotech stock. 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. Keeping this in mind we’re going to go over the latest hedge fund action regarding Perrigo Co Plc (NASDAQ:PRGO).

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

At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PRGO over the last 22 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

More specifically, Camber Capital Management was the largest shareholder of Perrigo Co Plc (NASDAQ:PRGO), with a stake worth $134.2 million reported as of the end of December. Trailing Camber Capital Management was D E Shaw, which amassed a stake valued at $34 million. Diamond Hill Capital, Millennium Management, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Camber Capital Management allocated the biggest weight to Perrigo Co Plc (NASDAQ:PRGO), around 4.71% of its 13F portfolio. MD Sass is also relatively very bullish on the stock, setting aside 3.85 percent of its 13F equity portfolio to PRGO.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, initiated the most outsized position in Perrigo Co Plc (NASDAQ:PRGO). Woodline Partners had $13 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $7.5 million position during the quarter. The other funds with brand new PRGO positions are Dmitry Balyasny’s Balyasny Asset Management, Qing Li’s Sciencast Management, and Matthew Tewksbury’s Stevens Capital Management.

Let’s go over hedge fund activity in other stocks similar to Perrigo Co Plc (NASDAQ:PRGO). These stocks are TopBuild Corp (NYSE:BLD), Mattel, Inc. (NASDAQ:MAT), Devon Energy Corporation (NYSE:DVN), Western Alliance Bancorporation (NYSE:WAL), Targa Resources Corp (NYSE:TRGP), LG Display Co Ltd. (NYSE:LPL), and Shift4 Payments, Inc. (NYSE:FOUR). This group of stocks’ market valuations match PRGO’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $399 million. That figure was $363 million in PRGO’s case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 7 bullish hedge fund positions. Perrigo Co Plc (NASDAQ:PRGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRGO is 53.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 1.5 percentage points. Unfortunately PRGO wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PRGO were disappointed as the stock returned -8.9% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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