At the end of February we announced the arrival of the first US recession since 2009 and we predicted 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 Prestige Consumer Healthcare Inc. (NYSE:PBH).
Is Prestige Consumer Healthcare Inc. (NYSE:PBH) a healthy stock for your portfolio? The best stock pickers are becoming more confident. The number of bullish hedge fund positions increased by 3 lately. Our calculations also showed that PBH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Fisher of Fisher Asset Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s view the key hedge fund action encompassing Prestige Consumer Healthcare Inc. (NYSE:PBH).
How have hedgies been trading Prestige Consumer Healthcare Inc. (NYSE:PBH)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PBH over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the most valuable position in Prestige Consumer Healthcare Inc. (NYSE:PBH), worth close to $29.9 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $23.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Noam Gottesman’s GLG Partners, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Prestige Consumer Healthcare Inc. (NYSE:PBH), around 0.14% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.14 percent of its 13F equity portfolio to PBH.
As one would reasonably expect, key money managers have jumped into Prestige Consumer Healthcare Inc. (NYSE:PBH) headfirst. Renaissance Technologies, assembled the most valuable position in Prestige Consumer Healthcare Inc. (NYSE:PBH). Renaissance Technologies had $2.4 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Prestige Consumer Healthcare Inc. (NYSE:PBH). We will take a look at Denali Therapeutics Inc. (NASDAQ:DNLI), Cathay General Bancorp (NASDAQ:CATY), AllianceBernstein Holding LP (NYSE:AB), and Fastly, Inc. (NYSE:FSLY). This group of stocks’ market values match PBH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DNLI | 14 | 70980 | 5 |
| CATY | 15 | 21855 | 1 |
| AB | 7 | 19810 | -4 |
| FSLY | 22 | 276560 | 3 |
| Average | 14.5 | 97301 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $86 million in PBH’s case. Fastly, Inc. (NYSE:FSLY) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 7 bullish hedge fund positions. Prestige Consumer Healthcare Inc. (NYSE:PBH) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately PBH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PBH were disappointed as the stock returned 7.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Prestige Consumer Healthcare Inc. (NYSE:PBH)
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Disclosure: None. This article was originally published at Insider Monkey.
