The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors' filings. In this article, we analyze how these elite funds and prominent investors traded PPG Industries, Inc. (NYSE:PPG) based on those filings.
PPG Industries, Inc. (NYSE:PPG) was in 23 hedge funds' portfolios at the end of March. PPG has experienced an increase in hedge fund sentiment in recent months. There were 19 hedge funds in our database with PPG holdings at the end of the previous quarter. Our calculations also showed that ppg 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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
Let's take a look at the key hedge fund action encompassing PPG Industries, Inc. (NYSE:PPG).
How are hedge funds trading PPG Industries, Inc. (NYSE:PPG)?
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in PPG a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Trian Partners was the largest shareholder of PPG Industries, Inc. (NYSE:PPG), with a stake worth $675.3 million reported as of the end of March. Trailing Trian Partners was Citadel Investment Group, which amassed a stake valued at $138.7 million. Balyasny Asset Management, Adage Capital Management, and Echo Street Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the biggest position in PPG Industries, Inc. (NYSE:PPG). Citadel Investment Group had $138.7 million invested in the company at the end of the quarter. Greg Poole's Echo Street Capital Management also made a $10.5 million investment in the stock during the quarter. The other funds with brand new PPG positions are Lee Ainslie's Maverick Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Israel Englander's Millennium Management.
Let's also examine hedge fund activity in other stocks similar to PPG Industries, Inc. (NYSE:PPG). We will take a look at Lyft, Inc. (NASDAQ:LYFT), SunTrust Banks, Inc. (NYSE:STI), Ingersoll-Rand Plc (NYSE:IR), and Zimmer Biomet Holdings Inc (NYSE:ZBH). All of these stocks' market caps match PPG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LYFT,71,2154307,71 STI,22,592065,-12 IR,39,1625782,-4 ZBH,35,1765125,-1 Average,41.75,1534320,13.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.75 hedge funds with bullish positions and the average amount invested in these stocks was $1534 million. That figure was $926 million in PPG's case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand SunTrust Banks, Inc. (NYSE:STI) is the least popular one with only 22 bullish hedge fund positions. PPG Industries, Inc. (NYSE:PPG) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately PPG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PPG investors were disappointed as the stock returned -4.6% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.