Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Pool Corporation (NASDAQ:POOL) to find out whether there were any major changes in hedge funds’ views.
Pool Corporation (NASDAQ:POOL) shareholders have witnessed an increase in hedge fund sentiment recently. Pool Corporation (NASDAQ:POOL) was in 36 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that POOL isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Now we’re going to go over the fresh hedge fund action regarding Pool Corporation (NASDAQ:POOL).
Do Hedge Funds Think POOL Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in POOL over the last 21 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the most valuable position in Pool Corporation (NASDAQ:POOL), worth close to $216.5 million, comprising 1.1% of its total 13F portfolio. Coming in second is Fisher Asset Management, managed by Ken Fisher, which holds a $93.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain Ian Simm’s Impax Asset Management, Renaissance Technologies and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Aubrey Capital Management allocated the biggest weight to Pool Corporation (NASDAQ:POOL), around 1.71% of its 13F portfolio. Chilton Investment Company is also relatively very bullish on the stock, dishing out 1.65 percent of its 13F equity portfolio to POOL.
Consequently, key hedge funds were leading the bulls’ herd. Carlson Capital, managed by Clint Carlson, assembled the largest position in Pool Corporation (NASDAQ:POOL). Carlson Capital had $20.8 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $12.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Donald Sussman’s Paloma Partners, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s now review hedge fund activity in other stocks similar to Pool Corporation (NASDAQ:POOL). We will take a look at Carnival Corporation & Plc (NYSE:CCL), POSCO (NYSE:PKX), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), HubSpot Inc (NYSE:HUBS), Mid America Apartment Communities Inc (NYSE:MAA), The Hartford Financial Services Group Inc (NYSE:HIG), and Teradyne, Inc. (NASDAQ:TER). This group of stocks’ market valuations are closest to POOL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCL | 37 | 285153 | 6 |
| PKX | 11 | 87343 | 1 |
| JBHT | 38 | 329247 | 14 |
| HUBS | 40 | 1187421 | -1 |
| MAA | 27 | 449666 | -3 |
| HIG | 36 | 966601 | -3 |
| TER | 42 | 1365348 | 8 |
| Average | 33 | 667254 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $667 million. That figure was $917 million in POOL’s case. Teradyne, Inc. (NASDAQ:TER) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 11 bullish hedge fund positions. Pool Corporation (NASDAQ:POOL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for POOL is 76.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately POOL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on POOL were disappointed as the stock returned 9.1% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
