We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. That's a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
PACCAR Inc (NASDAQ:PCAR) investors should be aware of a decrease in support from the world's most elite money managers of late. Our calculations also showed that PCAR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are seen as worthless, old financial tools of years past. While there are over 8000 funds with their doors open at the moment, Our experts choose to focus on the bigwigs of this group, about 750 funds. These money managers oversee the majority of all hedge funds' total capital, and by tailing their finest picks, Insider Monkey has spotted several investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to go over the new hedge fund action surrounding PACCAR Inc (NASDAQ:PCAR).
What have hedge funds been doing with PACCAR Inc (NASDAQ:PCAR)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PCAR over the last 17 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of PACCAR Inc (NASDAQ:PCAR), with a stake worth $25.8 million reported as of the end of September. Trailing D E Shaw was Renaissance Technologies, which amassed a stake valued at $24.5 million. GAMCO Investors, AQR Capital Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to PACCAR Inc (NASDAQ:PCAR), around 0.89% of its portfolio. Impala Asset Management is also relatively very bullish on the stock, earmarking 0.67 percent of its 13F equity portfolio to PCAR.
Judging by the fact that PACCAR Inc (NASDAQ:PCAR) has faced declining sentiment from the smart money, it's safe to say that there was a specific group of hedge funds who sold off their full holdings by the end of the third quarter. Interestingly, Matthew Tewksbury's Stevens Capital Management dropped the largest position of the 750 funds watched by Insider Monkey, worth about $11 million in stock. Michael Kharitonov and Jon David McAuliffe's fund, Voleon Capital, also dropped its stock, about $4.2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to PACCAR Inc (NASDAQ:PCAR). We will take a look at Xilinx, Inc. (NASDAQ:XLNX), Ball Corporation (NYSE:BLL), Baker Hughes, a GE company (NYSE:BHGE), and Agilent Technologies Inc. (NYSE:A). This group of stocks' market valuations are closest to PCAR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XLNX,38,1040263,-1 BLL,28,556069,1 BHGE,33,954876,15 A,37,1857520,-2 Average,34,1102182,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1102 million. That figure was $194 million in PCAR's case. Xilinx, Inc. (NASDAQ:XLNX) is the most popular stock in this table. On the other hand Ball Corporation (NYSE:BLL) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks PACCAR Inc (NASDAQ:PCAR) is even less popular than BLL. Hedge funds clearly dropped the ball on PCAR as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on PCAR as the stock returned 16.7% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.