Papa John’s International, Inc. (PZZA): Are Hedge Funds Right About This Stock?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Papa John’s International, Inc. (NASDAQ:PZZA) in this article.

Is Papa John’s International, Inc. (NASDAQ:PZZA) the right investment to pursue these days? Investors who are in the know were getting more bullish. The number of long hedge fund positions went up by 3 in recent months. Papa John’s International, Inc. (NASDAQ:PZZA) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 38. Our calculations also showed that PZZA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 30 hedge funds in our database with PZZA positions at the end of the second quarter.

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a peek at the new hedge fund action encompassing Papa John’s International, Inc. (NASDAQ:PZZA).

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

At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in PZZA 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.

When looking at the institutional investors followed by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the most valuable position in Papa John’s International, Inc. (NASDAQ:PZZA), worth close to $350.4 million, corresponding to 6.4% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $97.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism comprise Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to Papa John’s International, Inc. (NASDAQ:PZZA), around 6.41% of its 13F portfolio. 13D Management is also relatively very bullish on the stock, earmarking 5.79 percent of its 13F equity portfolio to PZZA.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the most outsized position in Papa John’s International, Inc. (NASDAQ:PZZA). Point72 Asset Management had $13.1 million invested in the company at the end of the quarter. John Brennan’s Sirios Capital Management also made a $12.7 million investment in the stock during the quarter. The following funds were also among the new PZZA investors: Lee Ainslie’s Maverick Capital, Dmitry Balyasny’s Balyasny Asset Management, and Gabriel Plotkin’s Melvin Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Papa John’s International, Inc. (NASDAQ:PZZA). We will take a look at Shell Midstream Partners LP (NYSE:SHLX), The Hanover Insurance Group, Inc. (NYSE:THG), FTI Consulting, Inc. (NYSE:FCN), Ryman Hospitality Properties, Inc. (NYSE:RHP), Abcam plc (NASDAQ:ABCM), Flywire Corporation (NASDAQ:FLYW), and Wintrust Financial Corporation (NASDAQ:WTFC). All of these stocks’ market caps are closest to PZZA’s market cap.

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As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $745 million in PZZA’s case. FTI Consulting, Inc. (NYSE:FCN) is the most popular stock in this table. On the other hand Abcam plc (NASDAQ:ABCM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Papa John’s International, Inc. (NASDAQ:PZZA) is more popular among hedge funds. Our overall hedge fund sentiment score for PZZA is 84.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately PZZA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PZZA were disappointed as the stock returned -3.7% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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