The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Party City Holdco Inc (NYSE:PRTY) based on those filings.
Party City Holdco Inc (NYSE:PRTY) has experienced an increase in activity from the world's largest hedge funds recently. Party City Holdco Inc (NYSE:PRTY) was in 20 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PRTY 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.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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. With all of this in mind we're going to take a glance at the fresh hedge fund action regarding Party City Holdco Inc (NYSE:PRTY).
Do Hedge Funds Think PRTY Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in PRTY a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, CAS Investment Partners held the most valuable stake in Party City Holdco Inc (NYSE:PRTY), which was worth $149.2 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $18.8 million worth of shares. Two Sigma Advisors, Arrowstreet Capital, and Woodson 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 CAS Investment Partners allocated the biggest weight to Party City Holdco Inc (NYSE:PRTY), around 6.34% of its 13F portfolio. Southport Management is also relatively very bullish on the stock, designating 2.37 percent of its 13F equity portfolio to PRTY.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Woodson Capital Management, managed by James Woodson Davis, initiated the most outsized position in Party City Holdco Inc (NYSE:PRTY). Woodson Capital Management had $16.8 million invested in the company at the end of the quarter. Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management also initiated a $9.3 million position during the quarter. The other funds with new positions in the stock are Mike Masters's Masters Capital Management, D. E. Shaw's D E Shaw, and Dmitry Balyasny's Balyasny Asset Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Party City Holdco Inc (NYSE:PRTY) but similarly valued. We will take a look at Kraton Corporation (NYSE:KRA), Immunovant, Inc. (NASDAQ:IMVT), Ferroglobe PLC (NASDAQ:GSM), AngioDynamics, Inc. (NASDAQ:ANGO), TPG RE Finance Trust, Inc. (NYSE:TRTX), SI-BONE, Inc. (NASDAQ:SIBN), and So-Young International Inc. (NASDAQ:SY). This group of stocks' market valuations are similar to PRTY's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRA,19,131989,-1 IMVT,21,99203,-5 GSM,19,145796,3 ANGO,22,155307,7 TRTX,10,32371,2 SIBN,28,202365,2 SY,5,14330,-1 Average,17.7,111623,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $256 million in PRTY's case. SI-BONE, Inc. (NASDAQ:SIBN) is the most popular stock in this table. On the other hand So-Young International Inc. (NASDAQ:SY) is the least popular one with only 5 bullish hedge fund positions. Party City Holdco Inc (NYSE:PRTY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRTY is 68.6. 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 PRTY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PRTY were disappointed as the stock returned -23.7% 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.