Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Perrigo Company (NASDAQ:PRGO) based on that data.
Perrigo Company (NASDAQ:PRGO) has seen an increase in hedge fund interest recently. Our calculations also showed that PRGO isn't among the 30 most popular stocks among hedge funds (click for Q1 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 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 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_758429" align="aligncenter" width="400"] Ric Dillon of Diamond Hill CapitalRic Dillon[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a glance at the fresh hedge fund action regarding Perrigo Company (NASDAQ:PRGO).
How are hedge funds trading Perrigo Company (NASDAQ:PRGO)?
At Q1's end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PRGO over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Perrigo Company (NASDAQ:PRGO) was held by Citadel Investment Group, which reported holding $119 million worth of stock at the end of September. It was followed by Camber Capital Management with a $96.2 million position. Other investors bullish on the company included Diamond Hill Capital, Millennium Management, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Perrigo Company (NASDAQ:PRGO), around 7.28% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 5.74 percent of its 13F equity portfolio to PRGO.
As industrywide interest jumped, key money managers were leading the bulls' herd. Alyeska Investment Group, managed by Anand Parekh, assembled the biggest position in Perrigo Company (NASDAQ:PRGO). Alyeska Investment Group had $28.5 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $19.3 million investment in the stock during the quarter. The following funds were also among the new PRGO investors: Justin John Ferayorni's Tamarack Capital Management, Martin D. Sass's MD Sass, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's check out hedge fund activity in other stocks similar to Perrigo Company (NASDAQ:PRGO). We will take a look at ABIOMED, Inc. (NASDAQ:ABMD), Zynga Inc (NASDAQ:ZNGA), F5 Networks, Inc. (NASDAQ:FFIV), and Wynn Resorts, Limited (NASDAQ:WYNN). This group of stocks' market caps match PRGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABMD,27,522802,-8 ZNGA,59,1015313,11 FFIV,32,940064,3 WYNN,40,403164,-4 Average,39.5,720336,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.5 hedge funds with bullish positions and the average amount invested in these stocks was $720 million. That figure was $464 million in PRGO's case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table. On the other hand ABIOMED, Inc. (NASDAQ:ABMD) is the least popular one with only 27 bullish hedge fund positions. Perrigo Company (NASDAQ:PRGO) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately PRGO wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PRGO investors were disappointed as the stock returned 14.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.