At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Papa John’s Int’l, Inc. (NASDAQ:PZZA) ready to rally soon? Money managers are becoming more confident. The number of bullish hedge fund positions experienced an increase of 2 in recent months. PZZAwas in 14 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with PZZA holdings at the end of the previous quarter. At the end of this article we will also compare PZZA to other stocks including PRA Health Sciences Inc (NASDAQ:PRAH), Tech Data Corp (NASDAQ:TECD), and Compass Minerals International, Inc. (NYSE:CMP) to get a better sense of its popularity.
Follow Papa Johns International Inc (NASDAQ:PZZA)
Follow Papa Johns International Inc (NASDAQ:PZZA)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a look at the recent action surrounding Papa John’s Int’l, Inc. (NASDAQ:PZZA).
How are hedge funds trading Papa John’s Int’l, Inc. (NASDAQ:PZZA)?
Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PZZA over the last 5 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in Papa John’s Int’l, Inc. (NASDAQ:PZZA), worth close to $56 million, amounting to 0.1% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $46.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Alexander Mitchell’s Scopus Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital. 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.
As industrywide interest jumped, key hedge funds have jumped into Papa John’s Int’l, Inc. (NASDAQ:PZZA) headfirst. Shellback Capital, led by Doug Gordon, Jon Hilsabeck and Don Jabro, created the biggest position in Papa John’s Int’l, Inc. (NASDAQ:PZZA). Shellback Capital had $2.8 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $2 million investment in the stock during the quarter. The other funds with brand new PZZA positions are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Ken Griffin’s Citadel Investment Group, and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Papa John’s Int’l, Inc. (NASDAQ:PZZA) but similarly valued. These stocks are PRA Health Sciences Inc (NASDAQ:PRAH), Tech Data Corp (NASDAQ:TECD), Compass Minerals International, Inc. (NYSE:CMP), and Allegiant Travel Company (NASDAQ:ALGT). This group of stocks’ market values are similar to PZZA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRAH | 23 | 257262 | 5 |
| TECD | 22 | 294161 | 6 |
| CMP | 6 | 74130 | -5 |
| ALGT | 21 | 225333 | 3 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $131 million in PZZA’s case. PRA Health Sciences Inc (NASDAQ:PRAH) is the most popular stock in this table. On the other hand Compass Minerals International, Inc. (NYSE:CMP) is the least popular one with only 6 bullish hedge fund positions. Papa John’s Int’l, Inc. (NASDAQ:PZZA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PRAH might be a better candidate to consider taking a long position in.
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