The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Pilgrim's Pride Corporation (NASDAQ:PPC) from the perspective of those elite funds.
Pilgrim's Pride Corporation (NASDAQ:PPC) has experienced an increase in activity from the world's largest hedge funds lately. Our calculations also showed that PPC 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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 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.
[caption id="attachment_30621" align="aligncenter" width="487"] Cliff Asness of AQR Capital Management[/caption]
Let's analyze the fresh hedge fund action encompassing Pilgrim's Pride Corporation (NASDAQ:PPC).
Hedge fund activity in Pilgrim's Pride Corporation (NASDAQ:PPC)
At Q3's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2018. On the other hand, there were a total of 23 hedge funds with a bullish position in PPC at the beginning of this year. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Pilgrim's Pride Corporation (NASDAQ:PPC), with a stake worth $48 million reported as of the end of September. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $16.4 million. Gotham Asset Management, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key hedge funds have been driving this bullishness. Gotham Asset Management, managed by Joel Greenblatt, established the biggest position in Pilgrim's Pride Corporation (NASDAQ:PPC). Gotham Asset Management had $11.4 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $0.6 million investment in the stock during the quarter. The other funds with brand new PPC positions are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Pilgrim's Pride Corporation (NASDAQ:PPC) but similarly valued. We will take a look at Teradata Corporation (NYSE:TDC), Medidata Solutions Inc (NASDAQ:MDSO), Agios Pharmaceuticals Inc (NASDAQ:AGIO), and Associated Banc Corp (NYSE:ASB). All of these stocks' market caps resemble PPC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TDC,23,254471,2 MDSO,14,136899,3 AGIO,22,372204,-1 ASB,17,297669,4 Average,19,265,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $106 million in PPC's case. Teradata Corporation (NYSE:TDC) is the most popular stock in this table. On the other hand Medidata Solutions Inc (NASDAQ:MDSO) is the least popular one with only 14 bullish hedge fund positions. Pilgrim's Pride Corporation (NASDAQ:PPC) 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. In this regard TDC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.