Is PJT Partners Inc (NYSE:PJT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Hedge fund interest in PJT Partners Inc (NYSE:PJT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PJT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare PJT to other stocks including 2U Inc (NASDAQ:TWOU), Editas Medicine, Inc. (NASDAQ:EDIT), and Masonite International Corp (NYSE:DOOR) to get a better sense of its popularity.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the fresh hedge fund action surrounding PJT Partners Inc (NYSE:PJT).
Do Hedge Funds Think PJT Is A Good Stock To Buy Now?
At first quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in PJT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of PJT Partners Inc (NYSE:PJT), with a stake worth $14 million reported as of the end of March. Trailing Adage Capital Management was Arrowstreet Capital, which amassed a stake valued at $12.9 million. Tudor Investment Corp, Citadel Investment Group, and GAMCO Investors 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 Prospector Partners allocated the biggest weight to PJT Partners Inc (NYSE:PJT), around 0.56% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.31 percent of its 13F equity portfolio to PJT.
Judging by the fact that PJT Partners Inc (NYSE:PJT) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies that elected to cut their entire stakes by the end of the first quarter. Intriguingly, Richard Driehaus’s Driehaus Capital said goodbye to the largest position of the 750 funds followed by Insider Monkey, comprising an estimated $8.4 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also dumped its stock, about $1.7 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as PJT Partners Inc (NYSE:PJT) but similarly valued. These stocks are 2U Inc (NASDAQ:TWOU), Editas Medicine, Inc. (NASDAQ:EDIT), Masonite International Corp (NYSE:DOOR), SITE Centers Corp. (NYSE:SITC), Cooper Tire & Rubber Company (NYSE:CTB), Enable Midstream Partners LP (NYSE:ENBL), and Taro Pharmaceutical Industries Ltd. (NYSE:TARO). All of these stocks’ market caps resemble PJT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWOU | 23 | 745360 | 1 |
| EDIT | 24 | 471562 | 7 |
| DOOR | 31 | 405857 | 3 |
| SITC | 9 | 71139 | -2 |
| CTB | 24 | 307379 | 1 |
| ENBL | 6 | 27004 | 3 |
| TARO | 8 | 81146 | 2 |
| Average | 17.9 | 301350 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $301 million. That figure was $90 million in PJT’s case. Masonite International Corp (NYSE:DOOR) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 6 bullish hedge fund positions. PJT Partners Inc (NYSE:PJT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PJT is 67. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately PJT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PJT were disappointed as the stock returned 5.9% since the end of March (through 7/16) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
