The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Penumbra Inc (NYSE:PEN).
Is Penumbra Inc (NYSE:PEN) an outstanding stock to buy now? Hedge funds are taking a bearish view. The number of long hedge fund positions retreated by 10 recently. Our calculations also showed that PEN 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). PEN was in 20 hedge funds' portfolios at the end of the first quarter of 2020. There were 30 hedge funds in our database with PEN holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most market participants, hedge funds are assumed to be slow, outdated financial vehicles of years past. While there are greater than 8000 funds trading at the moment, We choose to focus on the crème de la crème of this group, about 850 funds. These hedge fund managers orchestrate the majority of the hedge fund industry's total asset base, and by shadowing their top equity investments, Insider Monkey has discovered many investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per 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_189672" align="aligncenter" width="400"] David Blood of Generation Investment 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 trades like this one. 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. Now we're going to view the key hedge fund action surrounding Penumbra Inc (NYSE:PEN).
How have hedgies been trading Penumbra Inc (NYSE:PEN)?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the fourth quarter of 2019. On the other hand, there were a total of 20 hedge funds with a bullish position in PEN a year ago. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Generation Investment Management was the largest shareholder of Penumbra Inc (NYSE:PEN), with a stake worth $116.4 million reported as of the end of September. Trailing Generation Investment Management was Rock Springs Capital Management, which amassed a stake valued at $36.3 million. Columbus Circle Investors, Partner Fund Management, and Adage Capital 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 Partner Fund Management allocated the biggest weight to Penumbra Inc (NYSE:PEN), around 1.57% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, earmarking 1.5 percent of its 13F equity portfolio to PEN.
Seeing as Penumbra Inc (NYSE:PEN) has faced a decline in interest from hedge fund managers, we can see that there was a specific group of funds that decided to sell off their entire stakes last quarter. Intriguingly, Steve Cohen's Point72 Asset Management sold off the largest stake of all the hedgies tracked by Insider Monkey, totaling close to $20.2 million in stock. Israel Englander's fund, Millennium Management, also sold off its stock, about $7.7 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 10 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Penumbra Inc (NYSE:PEN) but similarly valued. We will take a look at Federal Realty Investment Trust (NYSE:FRT), AMERCO (NASDAQ:UHAL), argenx SE (NASDAQ:ARGX), and Elbit Systems Ltd. (NASDAQ:ESLT). This group of stocks' market valuations are similar to PEN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRT,24,78227,2 UHAL,15,318275,-2 ARGX,25,588505,-1 ESLT,6,13855,3 Average,17.5,249716,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $250 million. That figure was $247 million in PEN's case. argenx SE (NASDAQ:ARGX) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 6 bullish hedge fund positions. Penumbra Inc (NYSE:PEN) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately PEN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PEN were disappointed as the stock returned 6.2% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.