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In this article you are going to find out whether hedge funds think Premier Inc (NASDAQ:PINC) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is PINC a good stock to buy now? Prominent investors were getting less bullish. The number of bullish hedge fund bets went down by 5 lately. Premier Inc (NASDAQ:PINC) was in 10 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 21. Our calculations also showed that PINC isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with PINC holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 take a glance at the latest hedge fund action surrounding Premier Inc (NASDAQ:PINC).
Do Hedge Funds Think PINC Is A Good Stock To Buy Now?
At Q3's end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PINC over the last 21 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Premier Inc (NASDAQ:PINC), with a stake worth $124.1 million reported as of the end of September. Trailing Renaissance Technologies was East Side Capital (RR Partners), which amassed a stake valued at $13.1 million. Citadel Investment Group, Winton Capital Management, and D E Shaw 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 East Side Capital (RR Partners) allocated the biggest weight to Premier Inc (NASDAQ:PINC), around 2.26% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.28 percent of its 13F equity portfolio to PINC.
Due to the fact that Premier Inc (NASDAQ:PINC) has witnessed declining sentiment from the smart money, we can see that there is a sect of money managers who were dropping their full holdings last quarter. Interestingly, Israel Englander's Millennium Management said goodbye to the largest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $7.9 million in stock. George McCabe's fund, Portolan Capital Management, also dropped its stock, about $4.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Premier Inc (NASDAQ:PINC) but similarly valued. We will take a look at Xerox Holdings Corporation (NYSE:XRX), Cameco Corporation (NYSE:CCJ), Janus Henderson Group plc (NYSE:JHG), TriNet Group Inc (NYSE:TNET), Legend Biotech Corporation (NASDAQ:LEGN), Allakos Inc. (NASDAQ:ALLK), and Integra Lifesciences Holdings Corp (NASDAQ:IART). 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 XRX,28,828565,-7 CCJ,20,276218,-2 JHG,21,549840,-9 TNET,26,335733,5 LEGN,13,371533,-15 ALLK,9,305898,-5 IART,16,91422,-7 Average,19,394173,-5.7 [/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 $394 million. That figure was $161 million in PINC's case. Xerox Holdings Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand Allakos Inc. (NASDAQ:ALLK) is the least popular one with only 9 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 overall hedge fund sentiment score for PINC is 16.9. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on PINC, though not to the same extent, as the stock returned 11.5% since the end of Q3 (through December 8th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.