Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged during the first quarter. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 40% and 25% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the first 5 months of 2019 and outperformed the broader market benchmark by 6.6 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Premier Inc (NASDAQ:PINC) was in 16 hedge funds' portfolios at the end of the first quarter of 2019. PINC has experienced a decrease in hedge fund sentiment lately. There were 18 hedge funds in our database with PINC positions at the end of the previous quarter. Our calculations also showed that PINC isn't among the 30 most popular stocks among hedge funds.
To the average investor there are several formulas investors put to use to analyze stocks. Some of the most innovative formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best hedge fund managers can trounce the S&P 500 by a significant amount (see the details here).
Let's check out the latest hedge fund action surrounding Premier Inc (NASDAQ:PINC).
Hedge fund activity in Premier Inc (NASDAQ:PINC)
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PINC over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Premier Inc (NASDAQ:PINC), with a stake worth $90.4 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $19.4 million. East Side Capital (RR Partners), Two Sigma Advisors, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Premier Inc (NASDAQ:PINC) has witnessed falling interest from the entirety of the hedge funds we track, it's easy to see that there is a sect of money managers who sold off their entire stakes by the end of the third quarter. At the top of the heap, Michael Castor's Sio Capital said goodbye to the largest investment of all the hedgies tracked by Insider Monkey, comprising about $5 million in stock, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors was right behind this move, as the fund said goodbye to about $3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to Premier Inc (NASDAQ:PINC). These stocks are WSFS Financial Corporation (NASDAQ:WSFS), PTC Therapeutics, Inc. (NASDAQ:PTCT), Shake Shack Inc (NYSE:SHAK), and First Midwest Bancorp Inc (NASDAQ:FMBI). This group of stocks' market caps are closest to PINC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSFS,20,178393,8 PTCT,31,647470,6 SHAK,19,380847,0 FMBI,13,49554,1 Average,20.75,314066,3.75 [/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 $314 million. That figure was $163 million in PINC's case. PTC Therapeutics, Inc. (NASDAQ:PTCT) is the most popular stock in this table. On the other hand First Midwest Bancorp Inc (NASDAQ:FMBI) is the least popular one with only 13 bullish hedge fund positions. Premier Inc (NASDAQ:PINC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on PINC as the stock returned 11.5% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.