Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Penske Automotive Group, Inc. (NYSE:PAG).
Is Penske Automotive Group, Inc. (NYSE:PAG) a buy right now? Hedge funds are getting more bullish. The number of bullish hedge fund bets moved up by 3 in recent months. Our calculations also showed that pag isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]
Let's analyze the fresh hedge fund action regarding Penske Automotive Group, Inc. (NYSE:PAG).
What does the smart money think about Penske Automotive Group, Inc. (NYSE:PAG)?
At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PAG over the last 14 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Penske Automotive Group, Inc. (NYSE:PAG) was held by GAMCO Investors, which reported holding $20.7 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $15.3 million position. Other investors bullish on the company included Marshall Wace LLP, AQR Capital Management, and Millennium Management.
Now, key hedge funds were leading the bulls' herd. Renaissance Technologies, managed by Jim Simons, established the most outsized position in Penske Automotive Group, Inc. (NYSE:PAG). Renaissance Technologies had $6.2 million invested in the company at the end of the quarter. James Dondero's Highland Capital Management also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Daniel Arbess's Perella Weinberg Partners, and Ray Dalio's Bridgewater Associates.
Let's also examine hedge fund activity in other stocks similar to Penske Automotive Group, Inc. (NYSE:PAG). We will take a look at American National Insurance Company (NASDAQ:ANAT), J2 Global Inc (NASDAQ:JCOM), Laureate Education, Inc. (NASDAQ:LAUR), and American Eagle Outfitters Inc. (NYSE:AEO). This group of stocks' market valuations match PAG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANAT,15,37536,2 JCOM,17,203141,0 LAUR,24,273657,4 AEO,27,401197,1 Average,20.75,228883,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $97 million in PAG's case. American Eagle Outfitters Inc. (NYSE:AEO) is the most popular stock in this table. On the other hand American National Insurance Company (NASDAQ:ANAT) is the least popular one with only 15 bullish hedge fund positions. Penske Automotive Group, Inc. (NYSE:PAG) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately PAG wasn't nearly as popular as these 15 stock and hedge funds that were betting on PAG were disappointed as the stock returned 11.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.