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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article we look at what those investors think of Pentair plc (NYSE:PNR).
Is PNR stock a buy? Pentair plc (NYSE:PNR) has experienced a decrease in support from the world's most elite money managers of late. Pentair plc (NYSE:PNR) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 34. Our calculations also showed that PNR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 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. Now we're going to check out the latest hedge fund action regarding Pentair plc (NYSE:PNR).
Do Hedge Funds Think PNR Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in PNR a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Pentair plc (NYSE:PNR) was held by Impax Asset Management, which reported holding $489.2 million worth of stock at the end of December. It was followed by AQR Capital Management with a $41.9 million position. Other investors bullish on the company included Arrowstreet Capital, Adage Capital Management, and Fairpointe Capital. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to Pentair plc (NYSE:PNR), around 3.11% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, designating 2.68 percent of its 13F equity portfolio to PNR.
Due to the fact that Pentair plc (NYSE:PNR) has experienced a decline in interest from hedge fund managers, logic holds that there was a specific group of hedge funds that slashed their full holdings in the fourth quarter. At the top of the heap, Robert Joseph Caruso's Select Equity Group cut the largest stake of the 750 funds monitored by Insider Monkey, valued at about $14.8 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund said goodbye to about $8 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds in the fourth quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Pentair plc (NYSE:PNR) but similarly valued. These stocks are Aspen Technology, Inc. (NASDAQ:AZPN), CyrusOne Inc (NASDAQ:CONE), Formula One Group (NASDAQ:FWONA), NiSource Inc. (NYSE:NI), Watsco Inc (NYSE:WSO), IAA, Inc. (NYSE:IAA), and BridgeBio Pharma, Inc. (NASDAQ:BBIO). This group of stocks' market caps are closest to PNR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AZPN,29,1175533,3 CONE,21,280933,-9 FWONA,21,259250,2 NI,23,163551,-1 WSO,24,243018,-5 IAA,35,1547250,-1 BBIO,23,3029434,10 Average,25.1,956996,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $957 million. That figure was $665 million in PNR's case. IAA, Inc. (NYSE:IAA) is the most popular stock in this table. On the other hand CyrusOne Inc (NASDAQ:CONE) is the least popular one with only 21 bullish hedge fund positions. Pentair plc (NYSE:PNR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PNR is 54.2. 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 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on PNR as the stock returned 19.7% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.