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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Aramark (NYSE:ARMK).
Is ARMK stock a buy? Aramark (NYSE:ARMK) has seen a decrease in support from the world's most elite money managers recently. Aramark (NYSE:ARMK) was in 33 hedge funds' portfolios at the end of December. The all time high for this statistic is 53. Our calculations also showed that ARMK isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the 21st century investor’s toolkit there are numerous formulas stock market investors can use to evaluate their stock investments. Some of the most innovative formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outpace the broader indices by a significant margin (see the details here).
Michael Lowenstein of Kensico 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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 take a look at the fresh hedge fund action regarding Aramark (NYSE:ARMK).
Do Hedge Funds Think ARMK Is A Good Stock To Buy Now?
At the end of December, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. By comparison, 36 hedge funds held shares or bullish call options in ARMK a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Farallon Capital was the largest shareholder of Aramark (NYSE:ARMK), with a stake worth $424.2 million reported as of the end of December. Trailing Farallon Capital was Kensico Capital, which amassed a stake valued at $193.2 million. King Street Capital, Mantle Ridge LP, and Soroban Capital Partners 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 Mantle Ridge LP allocated the biggest weight to Aramark (NYSE:ARMK), around 100% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, earmarking 15.95 percent of its 13F equity portfolio to ARMK.
Judging by the fact that Aramark (NYSE:ARMK) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that slashed their full holdings heading into Q1. Intriguingly, Mark Kingdon's Kingdon Capital dropped the largest investment of the "upper crust" of funds monitored by Insider Monkey, totaling about $13.1 million in stock. Len Kipp and Xavier Majic's fund, Maple Rock Capital, also cut its stock, about $9.8 million worth. These moves are interesting, as total hedge fund interest fell by 7 funds heading into Q1.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Aramark (NYSE:ARMK) but similarly valued. We will take a look at Formula One Group (NASDAQ:FWONK), Camden Property Trust (NYSE:CPT), Lincoln National Corporation (NYSE:LNC), Trex Company, Inc. (NYSE:TREX), Floor & Decor Holdings, Inc. (NYSE:FND), Teck Resources Ltd (NYSE:TECK), and BanColombia S.A. (NYSE:CIB). This group of stocks' market values are similar to ARMK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FWONK,42,1724356,2 CPT,26,510604,1 LNC,36,708675,6 TREX,30,314067,4 FND,31,1027190,-11 TECK,31,798049,4 CIB,4,90995,1 Average,28.6,739134,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $739 million. That figure was $1422 million in ARMK's case. Formula One Group (NASDAQ:FWONK) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 4 bullish hedge fund positions. Aramark (NYSE:ARMK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARMK is 54.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately ARMK wasn't nearly as popular as these 30 stocks and hedge funds that were betting on ARMK were disappointed as the stock returned -0.3% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.