Is Perrigo Company plc (NYSE:PRGO) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Perrigo Company plc (NYSE:PRGO) investors should pay attention to a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that prgo isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a glance at the new hedge fund action encompassing Perrigo Company plc (NYSE:PRGO).
How have hedgies been trading Perrigo Company plc (NYSE:PRGO)?
At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PRGO over the last 15 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Perrigo Company plc (NYSE:PRGO) was held by Starboard Value LP, which reported holding $483.6 million worth of stock at the end of March. It was followed by Camber Capital Management with a $101.1 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and Citadel Investment Group.
Judging by the fact that Perrigo Company plc (NYSE:PRGO) has experienced falling interest from hedge fund managers, it's safe to say that there is a sect of hedgies that slashed their entire stakes last quarter. Interestingly, Peter Muller's PDT Partners said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, valued at about $10.2 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also said goodbye to its stock, about $4.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Perrigo Company plc (NYSE:PRGO). These stocks are American Campus Communities, Inc. (NYSE:ACC), Logitech International SA (NASDAQ:LOGI), Aqua America Inc (NYSE:WTR), and Pool Corporation (NASDAQ:POOL). This group of stocks' market caps resemble PRGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACC,19,322439,3 LOGI,15,239756,1 WTR,15,138874,-4 POOL,16,248823,-1 Average,16.25,237473,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $662 million in PRGO's case. American Campus Communities, Inc. (NYSE:ACC) is the most popular stock in this table. On the other hand Logitech International SA (NASDAQ:LOGI) is the least popular one with only 15 bullish hedge fund positions. Perrigo Company plc (NYSE:PRGO) 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately PRGO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PRGO were disappointed as the stock returned -10.1% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.