Is PJT Partners Inc (PJT) Going to Burn These Hedge Funds?
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. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like PJT Partners Inc (NYSE:PJT).
PJT Partners Inc (NYSE:PJT) shareholders have witnessed an increase in hedge fund interest lately. Our calculations also showed that PJT 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.
In the 21st century investor’s toolkit there are many indicators stock traders can use to value stocks. A duo of the most innovative indicators are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best investment managers can trounce the broader indices by a very impressive amount (see the details here).
[caption id="attachment_337596" align="aligncenter" width="450"]
Mark Rachesky of MHR Fund Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to view the latest hedge fund action regarding PJT Partners Inc (NYSE:PJT).
Hedge fund activity in PJT Partners Inc (NYSE:PJT)
At Q3's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in PJT a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Corsair Capital LLC was the largest shareholder of PJT Partners Inc (NYSE:PJT), with a stake worth $53.4 million reported as of the end of September. Trailing Corsair Capital LLC was MHR Fund Management, which amassed a stake valued at $35.8 million. Millennium Management, Sessa Capital, and Buckingham Capital Management 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 Corsair Capital LLC allocated the biggest weight to PJT Partners Inc (NYSE:PJT), around 100% of its 13F portfolio. MHR Fund Management is also relatively very bullish on the stock, setting aside 3.04 percent of its 13F equity portfolio to PJT.
Now, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in PJT Partners Inc (NYSE:PJT). Citadel Investment Group had $3.5 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $2 million investment in the stock during the quarter. The only other fund with a new position in the stock is David Harding's Winton Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as PJT Partners Inc (NYSE:PJT) but similarly valued. These stocks are Pacira BioSciences, Inc. (NASDAQ:PCRX), Studio City International Holdings Limited (NYSE:MSC), Shenandoah Telecommunications Company (NASDAQ:SHEN), and Kaiser Aluminum Corporation (NASDAQ:KALU). This group of stocks' market values are similar to PJT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PCRX,28,394779,0 MSC,4,243082,0 SHEN,15,78895,-3 KALU,20,118922,5 Average,16.75,208920,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $209 million. That figure was $149 million in PJT's case. Pacira BioSciences, Inc. (NASDAQ:PCRX) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 4 bullish hedge fund positions. PJT Partners Inc (NYSE:PJT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately PJT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PJT were disappointed as the stock returned 4.7% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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