It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Patriot National Inc (NYSE:PN) .
Patriot National Inc (NYSE:PN) investors should be aware of an increase in support from the world’s most successful money managers in recent months. There were 8 hedge funds in our database with PN positions at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO), LSB Industries, Inc. (NYSE:LXU), and Star Bulk Carriers Corp. (NASDAQ:SBLK) to gather more data points.
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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, let’s take a glance at the fresh action surrounding Patriot National Inc (NYSE:PN).
Hedge fund activity in Patriot National Inc (NYSE:PN)
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, growth of 60% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in PN at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Sander Gerber’s Hudson Bay Capital Management has the biggest position in Patriot National Inc (NYSE:PN), worth close to $11 million, comprising 0.3% of its total 13F portfolio. The second largest stake is held by Moab Capital Partners, led by Michael M. Rothenberg, which holds a $2.3 million position; 0.8% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism encompass Vishal Bhutani and Joshua Bederman’s Pyrrho Capital Management, Renaissance Technologies, one of the largest hedge funds in the world, and Adam Usdan’s Trellus Management Company. We should note that two of these hedge funds (Hudson Bay Capital Management and Moab Capital Partners) 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.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Pyrrho Capital Management, established the largest position in Patriot National Inc (NYSE:PN). Pyrrho Capital Management had $1.2 million invested in the company at the end of the quarter. Adam Usdan’s Trellus Management Company also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Matthew Hulsizer’s PEAK6 Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Patriot National Inc (NYSE:PN) but similarly valued. These stocks are JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO), LSB Industries, Inc. (NYSE:LXU), Star Bulk Carriers Corp. (NASDAQ:SBLK), and Tabula Rasa HealthCare Inc (NASDAQ:TRHC). This group of stocks’ market caps resemble PN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JASO | 6 | 4830 | -2 |
| LXU | 8 | 31284 | -1 |
| SBLK | 6 | 163101 | -1 |
| TRHC | 6 | 13360 | 6 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $17 million in PN’s case. LSB Industries, Inc. (NYSE:LXU) is the most popular stock in this table. On the other hand JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) is the least popular one with only 6 bullish hedge fund positions. Patriot National Inc (NYSE:PN) 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 LXU might be a better candidate to consider taking a long position in.
Disclosure: None
