Is The Pep Boys – Manny, Moe & Jack (NYSE:PBY) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
The Pep Boys – Manny, Moe & Jack has experienced an increase in support from the world’s most elite money managers recently. 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 Independent Bank Group Inc (NASDAQ:IBTX), Central Pacific Financial Corp. (NYSE:CPF), and Orbotech Ltd. (NASDAQ:ORBK) to gather more data points.
Follow Pep Boys Manny Moe & Jack (NYSE:PBY)
Follow Pep Boys Manny Moe & Jack (NYSE:PBY)
Now, we’re going to take a glance at the key action regarding The Pep Boys – Manny, Moe & Jack (NYSE:PBY).
What have hedge funds been doing with The Pep Boys – Manny, Moe & Jack (NYSE:PBY)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in The Pep Boys – Manny, Moe & Jack (NYSE:PBY), worth close to $83.2 million, comprising 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Water Island Capital, managed by John Orrico, which holds a $22.9 million position; 1.2% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism consist of Israel Englander’s Millennium Management, Steven Boyd’s Armistice Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Water Island Capital, managed by John Orrico, assembled the biggest position in The Pep Boys – Manny, Moe & Jack (NYSE:PBY). Water Island Capital had $22.9 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $10.2 million investment in the stock during the quarter. The following funds were also among the new PBY investors: David Costen Haley’s HBK Investments, Joel Greenblatt’s Gotham Asset Management, and Lee Munder’s Lee Munder Capital Group.
On the next page, we analyze hedge fund activity of similarly priced stocks to get a better feel on what the elite funds think of PBY.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Pep Boys – Manny, Moe & Jack (NYSE:PBY) but similarly valued. We will take a look at Independent Bank Group Inc (NASDAQ:IBTX), Central Pacific Financial Corp. (NYSE:CPF), Orbotech Ltd. (NASDAQ:ORBK), and Callaway Golf Co (NYSE:ELY). This group of stocks’ market valuations are similar to PBY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBTX | 10 | 29372 | 0 |
| CPF | 18 | 97338 | 4 |
| ORBK | 16 | 87214 | -1 |
| ELY | 23 | 145267 | -1 |
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $147 million in PBY’s case. Callaway Golf Co (NYSE:ELY) is the most popular stock in this table. On the other hand Independent Bank Group Inc (NASDAQ:IBTX) is the least popular one with only 10 bullish hedge fund positions. The Pep Boys – Manny, Moe & Jack (NYSE:PBY) is not the most popular stock in this group but hedge fund interest is still above average. That makes the stock worth a closer look.
