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In this article we will check out the progression of hedge fund sentiment towards Patria Investments Limited (NASDAQ:PAX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Patria Investments Limited (NASDAQ:PAX) the right investment to pursue these days? Money managers were taking a bullish view. The number of bullish hedge fund bets went up by 19 recently. Patria Investments Limited (NASDAQ:PAX) was in 19 hedge funds' portfolios at the end of March. Our calculations also showed that PAX isn't among the 30 most popular stocks among hedge funds (click for Q1 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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Robert Pohly of Samlyn Capital
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Do Hedge Funds Think PAX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in PAX a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Phill Gross and Robert Atchinson's Adage Capital Management has the number one position in Patria Investments Limited (NASDAQ:PAX), worth close to $45.9 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Point72 Asset Management, led by Steve Cohen, holding a $42.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish include Israel Englander's Millennium Management, Greg Poole's Echo Street Capital Management and Robert Pohly's Samlyn Capital. In terms of the portfolio weights assigned to each position Tiger Legatus Capital allocated the biggest weight to Patria Investments Limited (NASDAQ:PAX), around 6.67% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 0.28 percent of its 13F equity portfolio to PAX.
Now, some big names have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in Patria Investments Limited (NASDAQ:PAX). Adage Capital Management had $45.9 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $42.1 million investment in the stock during the quarter. The other funds with brand new PAX positions are Israel Englander's Millennium Management, Greg Poole's Echo Street Capital Management, and Robert Pohly's Samlyn Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Patria Investments Limited (NASDAQ:PAX) but similarly valued. We will take a look at Renasant Corporation (NASDAQ:RNST), Myriad Genetics, Inc. (NASDAQ:MYGN), O-I Glass, Inc. (NYSE:OI), Federal Signal Corporation (NYSE:FSS), Sorrento Therapeutics Inc (NASDAQ:SRNE), E2open Parent Holdings, Inc. (NYSE:ETWO), and The ODP Corporation (NYSE:ODP). This group of stocks' market values are similar to PAX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RNST,7,6587,0 MYGN,16,412141,0 OI,23,321783,-2 FSS,13,44589,-1 SRNE,14,51358,1 ETWO,35,997584,35 ODP,24,397466,4 Average,18.9,318787,5.3 [/table]
View table here if you experience formatting issues.
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 $319 million. That figure was $193 million in PAX's case. E2open Parent Holdings, Inc. (NYSE:ETWO) is the most popular stock in this table. On the other hand Renasant Corporation (NASDAQ:RNST) is the least popular one with only 7 bullish hedge fund positions. Patria Investments Limited (NASDAQ:PAX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PAX is 44.3. 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 PAX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on PAX were disappointed as the stock returned -8.8% 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.