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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on PACCAR Inc (NASDAQ:PCAR).
Is PCAR stock a buy? PACCAR Inc (NASDAQ:PCAR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds' portfolios at the end of December. Our calculations also showed that PCAR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Bilibili Inc. (NASDAQ:BILI), Eversource Energy (NYSE:ES), and Public Service Enterprise Group Incorporated (NYSE:PEG) to gather more data points.
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Robert Pohly of Samlyn Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's analyze the key hedge fund action surrounding PACCAR Inc (NASDAQ:PCAR).
Do Hedge Funds Think PCAR Is A Good Stock To Buy Now?
At the end of December, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in PCAR over the last 22 quarters. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander's Millennium Management has the largest position in PACCAR Inc (NASDAQ:PCAR), worth close to $92.8 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $76.3 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism include Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Neo Ivy Capital allocated the biggest weight to PACCAR Inc (NASDAQ:PCAR), around 0.7% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, dishing out 0.62 percent of its 13F equity portfolio to PCAR.
Since PACCAR Inc (NASDAQ:PCAR) has experienced falling interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of fund managers who sold off their entire stakes in the fourth quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management dropped the largest position of the 750 funds tracked by Insider Monkey, worth close to $11.9 million in stock, and Till Bechtolsheimer's Arosa Capital Management was right behind this move, as the fund dumped about $8.1 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to PACCAR Inc (NASDAQ:PCAR). These stocks are Bilibili Inc. (NASDAQ:BILI), Eversource Energy (NYSE:ES), Public Service Enterprise Group Incorporated (NYSE:PEG), Otis Worldwide Corporation (NYSE:OTIS), Rockwell Automation Inc. (NYSE:ROK), EOG Resources Inc (NYSE:EOG), and Banco Bradesco SA (NYSE:BBD). This group of stocks' market caps are similar to PCAR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BILI,46,3083768,9 ES,24,511581,4 PEG,28,374371,5 OTIS,59,2512029,6 ROK,35,635317,-9 EOG,45,750152,9 BBD,17,407632,-3 Average,36.3,1182121,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1182 million. That figure was $419 million in PCAR's case. Otis Worldwide Corporation (NYSE:OTIS) is the most popular stock in this table. On the other hand Banco Bradesco SA (NYSE:BBD) is the least popular one with only 17 bullish hedge fund positions. PACCAR Inc (NASDAQ:PCAR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PCAR is 52.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately PCAR wasn't nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); PCAR investors were disappointed as the stock returned 7% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.