Is Par Pacific Holdings, Inc. (PARR) Going to Burn These Hedge Funds?

·6 min read

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Par Pacific Holdings, Inc. (NYSE:PARR).

Par Pacific Holdings, Inc. (NYSE:PARR) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistic is 25. PARR shareholders have witnessed a decrease in support from the world's most elite money managers in recent months. There were 25 hedge funds in our database with PARR positions at the end of the first quarter. Our calculations also showed that PARR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Howard Marks of Oaktree Capital
Howard Marks of Oaktree Capital

Howard Marks of Oaktree Capital

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. Keeping this in mind let's take a look at the new hedge fund action encompassing Par Pacific Holdings, Inc. (NYSE:PARR).

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

At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in PARR over the last 24 quarters. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

More specifically, Rubric Capital Management was the largest shareholder of Par Pacific Holdings, Inc. (NYSE:PARR), with a stake worth $62.2 million reported as of the end of June. Trailing Rubric Capital Management was Nut Tree Capital, which amassed a stake valued at $49 million. Oaktree Capital Management, Park West Asset Management, and Birch Run Capital 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 Nut Tree Capital allocated the biggest weight to Par Pacific Holdings, Inc. (NYSE:PARR), around 10.14% of its 13F portfolio. Birch Run Capital is also relatively very bullish on the stock, earmarking 7.52 percent of its 13F equity portfolio to PARR.

Judging by the fact that Par Pacific Holdings, Inc. (NYSE:PARR) has witnessed falling interest from hedge fund managers, it's easy to see that there lies a certain "tier" of money managers that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Phill Gross and Robert Atchinson's Adage Capital Management cut the largest position of all the hedgies monitored by Insider Monkey, valued at an estimated $14.1 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund sold off about $3.5 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds by the end of the second quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Par Pacific Holdings, Inc. (NYSE:PARR) but similarly valued. We will take a look at Cerus Corporation (NASDAQ:CERS), Affimed NV (NASDAQ:AFMD), Quotient Technology Inc (NYSE:QUOT), First Foundation Inc (NASDAQ:FFWM), Celestica Inc. (NYSE:CLS), Apartment Investment and Management Co. (NYSE:AIV), and Diebold Nixdorf Incorporated (NYSE:DBD). This group of stocks' market values are closest to PARR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CERS,19,249917,4 AFMD,25,240790,2 QUOT,24,465804,-1 FFWM,18,54375,2 CLS,14,123207,1 AIV,15,147295,-3 DBD,17,180799,-2 Average,18.9,208884,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $209 million. That figure was $190 million in PARR's case. Affimed NV (NASDAQ:AFMD) is the most popular stock in this table. On the other hand Celestica Inc. (NYSE:CLS) is the least popular one with only 14 bullish hedge fund positions. Par Pacific Holdings, Inc. (NYSE:PARR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PARR is 51.3. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately PARR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PARR were disappointed as the stock returned -2.6% 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 many of these stocks already outperformed the market since 2019.

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

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