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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Premier Inc (NASDAQ:PINC)? The smart money sentiment can provide an answer to this question.
Is Premier Inc (NASDAQ:PINC) a buy right now? Prominent investors were getting more bullish. The number of bullish hedge fund positions advanced by 2 recently. Premier Inc (NASDAQ:PINC) was in 19 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 21. Our calculations also showed that PINC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In today’s marketplace there are a multitude of tools shareholders use to value publicly traded companies. A pair of the most useful tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best money managers can outpace the broader indices by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
David Harding of Winton Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 check out the key hedge fund action regarding Premier Inc (NASDAQ:PINC).
Do Hedge Funds Think PINC Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in PINC a year ago. With hedgies' capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Premier Inc (NASDAQ:PINC), with a stake worth $95.2 million reported as of the end of March. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $24.3 million. East Side Capital (RR Partners), Millennium Management, and P2 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 East Side Capital (RR Partners) allocated the biggest weight to Premier Inc (NASDAQ:PINC), around 1.64% of its 13F portfolio. P2 Capital Partners is also relatively very bullish on the stock, designating 0.24 percent of its 13F equity portfolio to PINC.
With a general bullishness amongst the heavyweights, some big names have jumped into Premier Inc (NASDAQ:PINC) headfirst. P2 Capital Partners, managed by Claus Moller, assembled the most outsized position in Premier Inc (NASDAQ:PINC). P2 Capital Partners had $3.7 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also initiated a $1.1 million position during the quarter. The other funds with brand new PINC positions are Ian Simm's Impax Asset Management, Jinghua Yan's TwinBeech Capital, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Premier Inc (NASDAQ:PINC) but similarly valued. We will take a look at American Well Corporation (NYSE:AMWL), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Avnet, Inc. (NYSE:AVT), Hutchison China MediTech Limited (NASDAQ:HCM), Qualys Inc (NASDAQ:QLYS), Alignment Healthcare, Inc. (NASDAQ:ALHC), and Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). This group of stocks' market caps resemble PINC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMWL,19,145488,0 ACAD,33,1482361,-5 AVT,27,850445,2 HCM,8,27401,2 QLYS,12,213773,-10 ALHC,17,93639,17 CBRL,16,163644,-10 Average,18.9,425250,-0.6 [/table]
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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 $425 million. That figure was $159 million in PINC's case. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 8 bullish hedge fund positions. Premier Inc (NASDAQ:PINC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PINC is 56.1. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately PINC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PINC were disappointed as the stock returned 5.2% since the end of March (through 7/16) 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.