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 PriceSmart, Inc. (NASDAQ:PSMT).
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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.
We're going to take a peek at the recent hedge fund action regarding PriceSmart, Inc. (NASDAQ:PSMT).
How are hedge funds trading PriceSmart, Inc. (NASDAQ:PSMT)?
Heading into the first quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in PSMT a year ago. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in PriceSmart, Inc. (NASDAQ:PSMT). Renaissance Technologies has a $23.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $4.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish include Matthew Hulsizer's PEAK6 Capital Management, Brandon Haley's Holocene Advisors and Israel Englander's Millennium Management.
Due to the fact that PriceSmart, Inc. (NASDAQ:PSMT) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising an estimated $3.6 million in stock. Alec Litowitz and Ross Laser's fund, Magnetar Capital, also said goodbye to its stock, about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to PriceSmart, Inc. (NASDAQ:PSMT). We will take a look at Bitauto Hldg Ltd (NYSE:BITA), Lithia Motors Inc (NYSE:LAD), Herman Miller, Inc. (NASDAQ:MLHR), and Power Integrations Inc (NASDAQ:POWI). This group of stocks' market values match PSMT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BITA,7,18400,0 LAD,20,470442,1 MLHR,22,99011,2 POWI,4,81545,-5 Average,13.25,167350,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $32 million in PSMT's case. Herman Miller, Inc. (NASDAQ:MLHR) is the most popular stock in this table. On the other hand Power Integrations Inc (NASDAQ:POWI) is the least popular one with only 4 bullish hedge fund positions. PriceSmart, Inc. (NASDAQ:PSMT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 PSMT wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); PSMT investors were disappointed as the stock returned -0.5% 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.