Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Parker-Hannifin Corporation (NYSE:PH).
Parker-Hannifin Corporation (NYSE:PH) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 56. PH has seen a decrease in support from the world’s most elite money managers in recent months. There were 42 hedge funds in our database with PH positions at the end of the second quarter. Our calculations also showed that PH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. Now we’re going to take a look at the latest hedge fund action encompassing Parker-Hannifin Corporation (NYSE:PH).
Daniel Sundheim of D1 Capital
Do Hedge Funds Think PH Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in PH over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in Parker-Hannifin Corporation (NYSE:PH), which was worth $867.2 million at the end of the third quarter. On the second spot was D1 Capital Partners which amassed $205.2 million worth of shares. Citadel Investment Group, Renaissance Technologies, and Senator Investment Group 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 Unio Capital allocated the biggest weight to Parker-Hannifin Corporation (NYSE:PH), around 3.13% of its 13F portfolio. Viking Global is also relatively very bullish on the stock, setting aside 2.41 percent of its 13F equity portfolio to PH.
Due to the fact that Parker-Hannifin Corporation (NYSE:PH) has witnessed falling interest from hedge fund managers, it’s safe to say that there were a few money managers that decided to sell off their full holdings last quarter. Interestingly, Matthew Stadelman’s Diamond Hill Capital cut the largest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $463.6 million in stock, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital was right behind this move, as the fund sold off about $63.4 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Parker-Hannifin Corporation (NYSE:PH) but similarly valued. These stocks are AutoZone, Inc. (NYSE:AZO), Unity Software Inc. (NYSE:U), DuPont de Nemours Inc (NYSE:DD), KKR & Co Inc. (NYSE:KKR), Otis Worldwide Corporation (NYSE:OTIS), AFLAC Incorporated (NYSE:AFL), and The Hershey Company (NYSE:HSY). All of these stocks’ market caps are similar to PH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AZO | 35 | 1020383 | 1 |
| U | 36 | 7901507 | 7 |
| DD | 51 | 1498457 | -6 |
| KKR | 56 | 4652455 | 2 |
| OTIS | 46 | 2206787 | 1 |
| AFL | 34 | 223946 | 1 |
| HSY | 33 | 1274071 | -5 |
| Average | 41.6 | 2682515 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.6 hedge funds with bullish positions and the average amount invested in these stocks was $2683 million. That figure was $1974 million in PH’s case. KKR & Co Inc. (NYSE:KKR) is the most popular stock in this table. On the other hand The Hershey Company (NYSE:HSY) is the least popular one with only 33 bullish hedge fund positions. Parker-Hannifin Corporation (NYSE:PH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PH is 35.9. 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. 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. A small number of hedge funds were also right about betting on PH as the stock returned 8.4% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.
Follow Parker Hannifin Corp (NYSE:PH)
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Disclosure: None. This article was originally published at Insider Monkey.
