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After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards CarParts.com, Inc. (NASDAQ:PRTS).
CarParts.com, Inc. (NASDAQ:PRTS) was in 22 hedge funds' portfolios at the end of June. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. PRTS investors should pay attention to an increase in activity from the world's largest hedge funds lately. There were 18 hedge funds in our database with PRTS holdings at the end of March. Our calculations also showed that PRTS isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Brad Farber of Atika Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks 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 we're going to take a gander at the latest hedge fund action surrounding CarParts.com, Inc. (NASDAQ:PRTS).
Do Hedge Funds Think PRTS Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PRTS over the last 24 quarters. With hedge funds' sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Park West Asset Management held the most valuable stake in CarParts.com, Inc. (NASDAQ:PRTS), which was worth $61.4 million at the end of the second quarter. On the second spot was G2 Investment Partners Management which amassed $31.6 million worth of shares. Shannon River Fund Management, Cannell Capital, and Driehaus 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 G2 Investment Partners Management allocated the biggest weight to CarParts.com, Inc. (NASDAQ:PRTS), around 5.21% of its 13F portfolio. Cannell Capital is also relatively very bullish on the stock, setting aside 3.83 percent of its 13F equity portfolio to PRTS.
Consequently, specific money managers have jumped into CarParts.com, Inc. (NASDAQ:PRTS) headfirst. Atika Capital, managed by Brad Farber, created the most outsized position in CarParts.com, Inc. (NASDAQ:PRTS). Atika Capital had $17 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Peter Algert's Algert Global, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's also examine hedge fund activity in other stocks similar to CarParts.com, Inc. (NASDAQ:PRTS). These stocks are Hanger, Inc. (NYSE:HNGR), i3 Verticals, Inc. (NASDAQ:IIIV), CAI International Inc (NYSE:CAI), Chase Corporation (NYSE:CCF), Mesoblast Limited (NASDAQ:MESO), Silvercorp Metals Inc. (NYSE:SVM), and Kearny Financial Corp. (NASDAQ:KRNY). All of these stocks' market caps are closest to PRTS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HNGR,13,46598,2 IIIV,12,44205,-2 CAI,24,210822,7 CCF,14,90016,5 MESO,2,423,0 SVM,9,31814,-1 KRNY,19,127951,2 Average,13.3,78833,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $229 million in PRTS's case. CAI International Inc (NYSE:CAI) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 2 bullish hedge fund positions. CarParts.com, Inc. (NASDAQ:PRTS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRTS is 84.5. 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 PRTS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PRTS were disappointed as the stock returned -22.5% 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.