The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Pure Storage Inc (NYSE:PSTG).
Is Pure Storage Inc (NYSE:PSTG) a healthy stock for your portfolio? The smart money is definitely in an optimistic mood. The number of long hedge fund positions rose by 3 recently. There were 14 hedge funds in our database with PSTG holdings at the end of the previous quarter. At the end of this article we will also compare PSTG to other stocks including MKS Instruments, Inc. (NASDAQ:MKSI), LPL Financial Holdings Inc (NASDAQ:LPLA), and Regal Beloit Corporation (NYSE:RBC) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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Keeping this in mind, we’re going to view the recent action regarding Pure Storage Inc(NYSE:PSTG).
What have hedge funds been doing with Pure Storage Inc(NYSE:PSTG)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the second quarter of 2016. On the other hand, there were a total of 14 hedge funds with a bullish position in PSTG at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Altimeter Capital Management, led by Brad Gerstner, holds the largest position in Pure Storage Inc(NYSE:PSTG). Altimeter Capital Management has a $55.1 million position in the stock, comprising 3.6% of its 13F portfolio. The second most bullish fund manager is Stanley Druckenmiller of Duquesne Capital, with a $26.9 million position; 2.4% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Chase Coleman’s Tiger Global Management LLC, Two Sigma Advisors and Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names have been driving this bullishness. Viking Global, led by Andreas Halvorsen, initiated the largest position in Pure Storage Inc (NYSE:PSTG). Viking Global had $3 million invested in the company at the end of the quarter. Sheetal Duggal’s Thrax Management also made a $2 million investment in the stock during the quarter. The other funds with brand new PSTG positions are Wojciech Uzdelewicz’s Espalier Global Management, D E Shaw, one of the biggest hedge funds in the world, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Pure Storage Inc (NYSE:PSTG) but similarly valued. We will take a look at MKS Instruments, Inc. (NASDAQ:MKSI), LPL Financial Holdings Inc (NASDAQ:LPLA), Regal Beloit Corporation (NYSE:RBC), and Avista Corp (NYSE:AVA). All of these stocks’ market caps are closest to PSTG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MKSI | 16 | 238113 | -3 |
| LPLA | 12 | 964791 | -1 |
| RBC | 21 | 158826 | 6 |
| AVA | 9 | 56026 | -3 |
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $127 million in PSTG’s case. REGAL-BELOIT CORPORATION (NYSE:RBC) is the most popular stock in this table. On the other hand Avista Corp (NYSE:AVA) is the least popular one with only 9 bullish hedge fund positions. Pure Storage Inc(NYSE:PSTG) 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 RBC might be a better candidate to consider taking a long position in.
