Where Does The Smart Money Stand On PPD, Inc. (PPD)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about PPD, Inc. (NASDAQ:PPD).

PPD, Inc. (NASDAQ:PPD) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 37 hedge funds’ portfolios at the end of September. Our calculations also showed that PPD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare PPD to other stocks including EXACT Sciences Corporation (NASDAQ:EXAS), Markel Corporation (NYSE:MKL), and Viatris Inc. (NASDAQ:VTRS) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s analyze the recent hedge fund action regarding PPD, Inc. (NASDAQ:PPD).

Andre Perold of HighVista Strategies

Do Hedge Funds Think PPD Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PPD over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

More specifically, Pentwater Capital Management was the largest shareholder of PPD, Inc. (NASDAQ:PPD), with a stake worth $497.8 million reported as of the end of September. Trailing Pentwater Capital Management was Millennium Management, which amassed a stake valued at $206.4 million. Alpine Associates, Magnetar Capital, and Soros Fund Management 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 Water Island Capital allocated the biggest weight to PPD, Inc. (NASDAQ:PPD), around 5.85% of its 13F portfolio. Alpine Associates is also relatively very bullish on the stock, setting aside 5.55 percent of its 13F equity portfolio to PPD.

Because PPD, Inc. (NASDAQ:PPD) has experienced falling interest from the smart money, it’s safe to say that there exists a select few fund managers that decided to sell off their entire stakes heading into Q4. Interestingly, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management sold off the biggest stake of the 750 funds tracked by Insider Monkey, comprising about $31.1 million in stock. Jeremy Green’s fund, Redmile Group, also said goodbye to its stock, about $21.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PPD, Inc. (NASDAQ:PPD) but similarly valued. These stocks are EXACT Sciences Corporation (NASDAQ:EXAS), Markel Corporation (NYSE:MKL), Viatris Inc. (NASDAQ:VTRS), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), Conagra Brands, Inc. (NYSE:CAG), Coupa Software Incorporated (NASDAQ:COUP), and GoodRx Holdings, Inc. (NASDAQ:GDRX). This group of stocks’ market valuations resemble PPD’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.6 hedge funds with bullish positions and the average amount invested in these stocks was $1908 million. That figure was $1890 million in PPD’s case. Viatris Inc. (NASDAQ:VTRS) is the most popular stock in this table. On the other hand Conagra Brands, Inc. (NYSE:CAG) is the least popular one with only 20 bullish hedge fund positions. PPD, Inc. (NASDAQ:PPD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PPD is 59.3. 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 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately PPD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PPD were disappointed as the stock returned 0.7% since the end of September (through 11/30) 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.