Hedge Funds Are Dumping Polaris Inc. (PII)

·6 min read

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 30th, 2021. What do these smart investors think about Polaris Inc. (NYSE:PII)?

Is Polaris Inc. (NYSE:PII) an outstanding investment right now? The best stock pickers were taking a pessimistic view. The number of bullish hedge fund positions shrunk by 9 lately. Polaris Inc. (NYSE:PII) was in 20 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 39. Our calculations also showed that PII isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Fred DiSanto Ancora Advisors
Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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. Now let's take a look at the fresh hedge fund action encompassing Polaris Inc. (NYSE:PII).

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

At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -31% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in PII over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Is PII A Good Stock To Buy?
Is PII A Good Stock To Buy?

More specifically, Arrowstreet Capital was the largest shareholder of Polaris Inc. (NYSE:PII), with a stake worth $113.1 million reported as of the end of June. Trailing Arrowstreet Capital was Fisher Asset Management, which amassed a stake valued at $73 million. Two Sigma Advisors, Silver Heights Capital Management, and D E Shaw 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 Silver Heights Capital Management allocated the biggest weight to Polaris Inc. (NYSE:PII), around 14.99% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, earmarking 0.74 percent of its 13F equity portfolio to PII.

Because Polaris Inc. (NYSE:PII) has witnessed bearish sentiment from the smart money, it's safe to say that there were a few funds who were dropping their entire stakes by the end of the second quarter. At the top of the heap, Ken Heebner's Capital Growth Management dropped the largest stake of the "upper crust" of funds monitored by Insider Monkey, valued at close to $26.7 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund cut about $15.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 9 funds by the end of the second quarter.

Let's also examine hedge fund activity in other stocks similar to Polaris Inc. (NYSE:PII). These stocks are Life Storage, Inc. (NYSE:LSI), Mirati Therapeutics, Inc. (NASDAQ:MRTX), TELUS International (Cda) Inc. (NYSE:TIXT), Concentrix Corporation (NASDAQ:CNXC), National Retail Properties, Inc. (NYSE:NNN), Ovintiv Inc. (NYSE:OVV), and Plains All American Pipeline, L.P. (NYSE:PAA). This group of stocks' market caps match PII's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSI,21,261561,-5 MRTX,55,2790783,-2 TIXT,6,19229,-4 CNXC,21,601344,-2 NNN,19,188064,-3 OVV,40,739285,10 PAA,7,65969,0 Average,24.1,666605,-0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $667 million. That figure was $464 million in PII's case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand TELUS International (Cda) Inc. (NYSE:TIXT) is the least popular one with only 6 bullish hedge fund positions. Polaris Inc. (NYSE:PII) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PII is 25.7. 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 negative signal and 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately PII wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PII investors were disappointed as the stock returned -7.4% since the end of June (through 10/22) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.

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