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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Aramark (NYSE:ARMK) and determine whether the smart money was really smart about this stock.
Aramark (NYSE:ARMK) was in 34 hedge funds' portfolios at the end of June. The all time high for this statistics is 53. ARMK has experienced an increase in hedge fund sentiment recently. There were 29 hedge funds in our database with ARMK holdings at the end of March. Our calculations also showed that ARMK isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
According to most investors, hedge funds are viewed as unimportant, old financial tools of years past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the crème de la crème of this group, approximately 850 funds. It is estimated that this group of investors manage the majority of the smart money's total capital, and by following their inimitable picks, Insider Monkey has spotted several investment strategies that have historically exceeded Mr. Market. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ricky Sandler of Eminence Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to take a gander at the fresh hedge fund action regarding Aramark (NYSE:ARMK).
How have hedgies been trading Aramark (NYSE:ARMK)?
At the end of June, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ARMK over the last 20 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Kensico Capital was the largest shareholder of Aramark (NYSE:ARMK), with a stake worth $142.6 million reported as of the end of September. Trailing Kensico Capital was Permian Investment Partners, which amassed a stake valued at $81.8 million. King Street Capital, Mantle Ridge LP, and Brahman 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 Mantle Ridge LP allocated the biggest weight to Aramark (NYSE:ARMK), around 100% of its 13F portfolio. Permian Investment Partners is also relatively very bullish on the stock, setting aside 14.69 percent of its 13F equity portfolio to ARMK.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. King Street Capital, managed by Brian J. Higgins, initiated the biggest position in Aramark (NYSE:ARMK). King Street Capital had $63.2 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $33.5 million investment in the stock during the quarter. The following funds were also among the new ARMK investors: Isaac Corre's Governors Lane, Andrew Kurita's Kettle Hill Capital Management, and Anna Nikolayevsky's Axel Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Aramark (NYSE:ARMK) but similarly valued. These stocks are American Financial Group (NYSE:AFG), Polaris Inc. (NYSE:PII), Inphi Corporation (NYSE:IPHI), Autoliv Inc. (NYSE:ALV), HD Supply Holdings Inc (NASDAQ:HDS), Apartment Investment and Management Co. (NYSE:AIV), and AppFolio Inc (NASDAQ:APPF). This group of stocks' market values are closest to ARMK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AFG,28,235585,4 PII,34,426967,10 IPHI,46,643116,10 ALV,22,542948,7 HDS,44,992771,4 AIV,24,488634,3 APPF,21,400415,2 Average,31.3,532919,5.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $533 million. That figure was $597 million in ARMK's case. Inphi Corporation (NYSE:IPHI) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 21 bullish hedge fund positions. Aramark (NYSE:ARMK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARMK is 55.2. 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. 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 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on ARMK as the stock returned 22.7% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.