After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Parker-Hannifin Corporation (NYSE:PH).
Is Parker-Hannifin Corporation (NYSE:PH) undervalued? Money managers were turning less bullish. The number of bullish hedge fund positions fell by 1 lately. Parker-Hannifin Corporation (NYSE:PH) was in 42 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 56. Our calculations also showed that PH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andreas Halvorsen of Viking Global
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Do Hedge Funds Think PH Is A Good Stock To Buy Now?
At the end of June, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PH over the last 24 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Diamond Hill Capital held the most valuable stake in Parker-Hannifin Corporation (NYSE:PH), which was worth $463.6 million at the end of the second quarter. On the second spot was Viking Global which amassed $204.6 million worth of shares. Millennium Management, Citadel Investment Group, and Renaissance Technologies 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 Shellback Capital allocated the biggest weight to Parker-Hannifin Corporation (NYSE:PH), around 3.43% of its 13F portfolio. Unio Capital is also relatively very bullish on the stock, dishing out 3.36 percent of its 13F equity portfolio to PH.
Because Parker-Hannifin Corporation (NYSE:PH) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers that decided to sell off their positions entirely heading into Q3. Intriguingly, Gregg Moskowitz’s Interval Partners said goodbye to the largest investment of the 750 funds tracked by Insider Monkey, totaling about $19.8 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund said goodbye to about $19.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Parker-Hannifin Corporation (NYSE:PH). We will take a look at O’Reilly Automotive Inc (NASDAQ:ORLY), Marathon Petroleum Corp (NYSE:MPC), The Allstate Corporation (NYSE:ALL), Fortinet Inc (NASDAQ:FTNT), Paychex, Inc. (NASDAQ:PAYX), Rocket Companies, Inc. (NYSE:RKT), and Manulife Financial Corporation (NYSE:MFC). This group of stocks’ market valuations match PH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORLY | 44 | 2366019 | -1 |
| MPC | 48 | 2616162 | 2 |
| ALL | 33 | 923765 | -8 |
| FTNT | 32 | 850545 | 9 |
| PAYX | 29 | 940182 | 4 |
| RKT | 13 | 115980 | -8 |
| MFC | 18 | 307415 | 1 |
| Average | 31 | 1160010 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1160 million. That figure was $1446 million in PH’s case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 13 bullish hedge fund positions. Parker-Hannifin Corporation (NYSE:PH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PH is 67.9. 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 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 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately PH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PH were disappointed as the stock returned -4.7% since the end of June (through 10/1) 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 many of these stocks already outperformed the market since 2019.
Follow Parker Hannifin Corp (NYSE:PH)
Follow Parker Hannifin Corp (NYSE:PH)
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Disclosure: None. This article was originally published at Insider Monkey.
