Hedge Funds Cashing Out Of Park National Corporation (PRK)
In this article you are going to find out whether hedge funds think Park National Corporation (NYSE:PRK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Park National Corporation (NYSE:PRK) has experienced a decrease in hedge fund interest of late. PRK was in 6 hedge funds' portfolios at the end of March. There were 10 hedge funds in our database with PRK holdings at the end of the previous quarter. Our calculations also showed that PRK 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.
If you'd ask most shareholders, hedge funds are assumed to be slow, old investment tools of years past. While there are more than 8000 funds trading at the moment, We choose to focus on the top tier of this group, around 850 funds. These money managers direct bulk of the smart money's total capital, and by watching their unrivaled stock picks, Insider Monkey has deciphered a number of investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_189632" align="aligncenter" width="397"]
David Harding of Winton Capital Management[/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 stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. Keeping this in mind let's take a look at the key hedge fund action encompassing Park National Corporation (NYSE:PRK).
Hedge fund activity in Park National Corporation (NYSE:PRK)
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -40% from the fourth quarter of 2019. By comparison, 5 hedge funds held shares or bullish call options in PRK a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Park National Corporation (NYSE:PRK), which was worth $3.8 million at the end of the third quarter. On the second spot was Winton Capital Management which amassed $1.9 million worth of shares. Citadel Investment Group, AQR Capital Management, and Millennium 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 Winton Capital Management allocated the biggest weight to Park National Corporation (NYSE:PRK), around 0.05% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0037 percent of its 13F equity portfolio to PRK.
Because Park National Corporation (NYSE:PRK) has experienced falling interest from the smart money, logic holds that there exists a select few fund managers who sold off their entire stakes in the first quarter. It's worth mentioning that Steve Cohen's Point72 Asset Management cut the largest investment of the "upper crust" of funds followed by Insider Monkey, comprising about $0.8 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also dropped its stock, about $0.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds in the first quarter.
Let's now review hedge fund activity in other stocks similar to Park National Corporation (NYSE:PRK). We will take a look at Rambus Inc. (NASDAQ:RMBS), Karyopharm Therapeutics Inc (NASDAQ:KPTI), EVO Payments, Inc. (NASDAQ:EVOP), and Minerals Technologies Inc (NYSE:MTX). This group of stocks' market values match PRK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RMBS,13,143097,-6 KPTI,21,617463,-3 EVOP,10,32684,-12 MTX,16,67403,2 Average,15,215162,-4.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $8 million in PRK's case. Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the most popular stock in this table. On the other hand EVO Payments, Inc. (NASDAQ:EVOP) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Park National Corporation (NYSE:PRK) is even less popular than EVOP. Hedge funds dodged a bullet by taking a bearish stance towards PRK. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately PRK wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); PRK investors were disappointed as the stock returned -3.1% during the second quarter (through June 10th) 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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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